Pakistani rupee hits 11-month low against UAE dirham

INTERNATIONAL DESK: The Pakistani rupee continued its slide, hitting a nearly 11-month low on Tuesday. The rupee fell from 44.7 on Monday to 45.02 on Tuesday against the UAE dirham, a drop of 0.67 per cent, according to xe.com.

The South Asian currency was trading at 165.4 against the US dollar on Tuesday.

The rupee touched this year’s high on May 15, 2021, when it reached 41.5 against the dirham. Gradually, it has weakened to 165.28 against the greenback on August 24 (45 versus the dirham), losing 8.4 per cent of its value in four months.

Pakistan on Tuesday received $2.75 billion from the International Monetary Fund (IMF) under a Special Drawing Rights (SDR) programme to support low-income countries affected by the coronavirus. This took Pakistan’s forex exchange reserves to $22.25 billion, but this big jump in forex reserves, too, failed to rein in the rupee’s slide on Tuesday.

Rajiv Raipancholia, CEO of Orient Exchange, said the Pakistani rupee continues to depreciate against the US dollar over the past four months.

“The reported deficits in the current account together with inflation in certain core items such as food and oil are some of the reasons behind this fall in rupee. Increasing imports to Pakistan is another reason that dollar continues to remain strong, thus leading to a weaker rupee,” he said.

Analysts estimate that the remittances to Pakistan will continue to remain strong as a weaker rupee will attract more foreign funds inflow from the country’s over eight million diaspora.

Pakistan has received record remittances in the past year since the outbreak of the Covid-19 pandemic, reaching $29.4 billion in 2020-21. Through Roshan Digital Accounts, the country has received an additional $2 billion so far from the country’s diaspora.

“There has been a surge in the volume of remittances to Pakistan and this is likely to go on as the Pakistani rupee continues to depreciate but at the same time inflation is increasing at a similar or faster pace,” added Raipancholia. (Khaleej Times)