The dollar continues to rally against the rupee on Wednesday, hitting a new high for the second day in a row, rising to Rs169.6 in the interbank market at the start of trading.
The rupee depreciated by 46 paisa against the greenback, according to an update posted at 9:58 a.m. on Mettis Global, a web-based financial data and analytics portal, and was quoted at 169.40/169.60, with trades reported at 169.50.
“Due to the recent sustained rise in the dollar’s value, importers have started booking the currency in advance, which has increased its demand in the interbank market,” Chairman of the Exchange Companies Association of Pakistan Malik Bostan told Dawn.com.
If the State Bank of Pakistan does not intervene, the dollar could become even more expensive, according to Bostan.
The dollar hit a new high of Rs168.94 on Tuesday, shattering investors’ faith in the local currency and exchange rate stability.
The rupee, which has been dubbed Asia’s worst-performing currency, appears to have cleared the way for the bullish US dollar to advance unabated and erode the rupee’s remaining value.
In the domestic market, the rupee has been rapidly losing purchasing power, resulting in high inflation that has harmed the ordinary populace.
The dollar reached Rs168.43 on August 26, 2020. Then it began to fall, reaching Rs151.83 on May 14, 2021. The greenback, on the other hand, began to rise and has gained 6.6 percent and 9.9 percent since June and May 14, 2021, respectively.
The State Bank of Pakistan had previously stated that due to an expected higher current account deficit, the dollar could appreciate during the current fiscal year.
The deadline for relinquishing Rs40,000 bonds is another reason that has quickened the pace of buying dollars on the open market. The government has set September 30 as the deadline for the bonds to be liquidated. The demand for the greenback has increased as investors liquidate their bonds and buy US dollars on the open market.