The Pakistani rupee fell by Rs3.42 against the US dollar during interbank trade on Wednesday, extending its losses from the previous day.

The local currency dropped 1.16 per cent in the interbank market to close at Rs294.93 against the greenback, according to the State Bank of Pakistan data.

In the open market, the dollar was being traded for Rs303.50 around 12:24pm.

Yesterday, the rupee had closed at 291.51 against the dollar, according to State Bank of Pakistan’s (SBP) daily update.

According to Khurram Schehzad, the chief executive of financial consultancy firm Alpha Beta Core, the dollar saw the rise due to imports opening up gradually and the letters of credits (LCs) retiring.

Schehzad said that the price of oil going up in the international market could also be cited as a reason for the dollar price to spike.

Tresmark’s Head of Strategy, Komal Mansoor, noted a “real shortage” of greenbacks in the market. She emphasised that considering the limited forex reserves, it seemed logical to devalue the rupee.

However, she added, the currencies could not be left to the market forces and little management was required from the central bank, especially in times of “extraordinary volatility”.

Yesterday, the finance division hiked the prices of petrol and diesel to a record Rs290.45 per litre and 293.40, respectively. It had said the prices of the two key fuels were raised because petroleum prices in the international market had increased during the last fortnight.