The local currency was changing hands at Rs219.7 per dollar at 11:45am, according to data shared by the Forex Association of Pakistan.
Saad bin Naseer, director of financial data and analytics portal Mettis Global, said the main reason for the rupee’s depreciation was the dollar index’s rise and the greenback’s strengthening in the international market.
“Our current account deficit is under control. In the coming days, the PKR will appreciate. The movement will be within the range of Rs219 to 222 per dollar. This is nothing unusual,” he commented.
The dollar was headed for its third weekly gain in a row and stood near its highest levels in decades against the euro and yen, Reuters reported earlier today.
The dollar index made a two-decade top at 109.99 overnight and was last at 109.51. It is up more than one per cent in the week since US Federal Reserve Chair Jerome Powell said that interest rates would need to be high “for some time” to control inflation, surprising markets.
Meanwhile, Exchange Companies Association of Pakistan (Ecap) General Secretary Zafar Paracha said the rupee declined because of pressure on the import bill and an increase in smuggling to Afghanistan.
The recent floods had destroyed infrastructure, houses, factories and crops and killed livestock, he noted, adding that consequently, the government removed duties on items received for flood affectees. In addition, the country started importing vegetables immediately to reduce shortages.
All of this, along with the government’s lifting of the ban on the import of non-essential and luxury items, would affect the import bill, Paracha said.
The Ecap general secretary said smuggling had increased despite law enforcement agencies’ efforts. “We have to stop the smuggling of currency at borders with Iran and Afghanistan and at airports. Agencies should announce a 50 per cent reward for whoever catches those smuggling currency. Things will come under control,” he suggested.
Paracha said smuggling of items on which the government imposed huge regulatory duties had also increased which had led to a higher demand for dollars.
He also called for revisiting the transit trade agreement with Afghanistan, saying that it was “eating up” Pakistan’s foreign exchange and revenue.
Provisional data shared by Pakistan Customs on Thursday showed the import bill fell by 13.5pc to $5.7 billion in August from $6.59bn in the same month last year.
In July, imports dropped by 12.81pc to $4.86bn from $5.57bn over the corresponding month of last year.
On a month-on-month basis, the import bill increased by 17.28pc.
The rupee had fallen to a record low of 239.94 on July 28. It had then recovered for 11 consecutive sessions, closing at Rs213.90 in the interbank on Aug 16.
However, the local currency started falling again from Aug 17, losing Rs8.02 till Aug 29. For the last three sessions, the rupee had made gains against the greenback before declining again today.