KARACHI: The ongoing fiscal year has proved to be one of the worst for the rupee, which has lost 16 per cent against the US dollar during the past nine months.
Currency experts and dealers are not sure how quickly the dollar would leap in the coming months, but some of them fear the 190 mark is not too far.
On Wednesday, the dollar was trading at Rs182.64 in the inter-bank market by the close compared to Rs157.40 on July 2, 2021 — a decrease of Rs25.24, or 16pc.
“It seems there is no plan to stop this dollar appreciation, which has inflated prices. It will ultimately hit both the cost of production and exports,” said Aamir Aziz, a manufacturer of exportable finished textile products.
“The dollar’s appreciation is now the real cause of inflation since both the volume and value of imports have increased more than 50 per cent this year,” he said.
Pakistan’s general inflation measured by Consumer Price Index (CPI) clocked in at a 24-month peak of 13pc in January as prices of almost all commodities and utilities maintained a growing trend. However, CPI slightly eased to 12.2pc in February, the Pakistan Bureau of Statistics said.
While all commodity prices are on the higher side in the international markets, the most painful for Pakistan is crude oil, whose prices have skyrocketed to $112 a barrel from around $80 at the start of the year.
The country imported petroleum products worth $11 billion during the eight months through February, representing a year-on-year increase of over 90pc, or $5.29bn.
Currency experts said this jump in the oil import bill would continue to press the local currency coupled with increasing dollar demand in the inter-bank market.
“There are no signs of recovery in the rupee’s value since the inflows are not enough to meet the growing challenges of trade and current account deficits,” said Atif Ahmed, a currency dealer in the inter-bank market. The current account deficit was over $12bn during the eight months from July to February.
Some currency dealers are also disappointed with the current political crisis and blame it for a weakening rupee.
Published in Dawn, March 31st, 2022
