Due to the increased demand for dollars for import payments, the Pakistani rupee depreciated to 279.04 against the US dollar in the interbank market. On Friday the rupee had closed at 278.95. In the open market, the currency also weakened, trading at 280.88 per dollar, slightly down from 280.79 in the previous session.
According to dealers, the local currency depreciation was driven by importers purchasing dollars to settle their payment obligations. However, the supply of dollars from exporters and remittances was inadequate to meet the rising demand from importers.
Data from the Pakistan Bureau of Statistics shows that the country’s trade deficit expanded to $2.313 billion in January, marking an 18% rise compared to the same month last year. Imports grew by 10% year-on-year to $5.233 billion, while exports saw a 5% increase, reaching $2.92 billion. Meanwhile, foreign exchange reserves continue to decline, with rising outflows from special convertible rupee accounts, including bonds and equities. These factors are putting pressure on the local currency.
Experts anticipate the rupee may depreciate to 280 this month and potentially weaken further to 281 by the end of the quarter. Despite the currency’s decline, they highlight that interbank liquidity remains stable. The central bank has efficiently managed foreign exchange reserves while meeting external debt obligations. The reserves held by the State Bank of Pakistan fell by $76 million to $11.372 billion as of January 24.
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