Pakistani rupee hit over 40-day low on Wednesday as demand for the US dollar increased after the government reopened more sectors of its economy following the lockdown due to Coronavirus.
The rupee, which has been continuously losing over the past month against dollar and other major currencies, hitting 45.05 against the UAE dirham and 165 versus greenback on Wednesday morning.
The reopening of the economy will result in more demand for the US currency by exporters in the near future, which will put further stress on the rupee.
The currency has lost 4.8 percent within a month. On May 1, it was trading at 42.9 against dirham. It fell to 43.66 on May 14 and was trading at 45.05 on Wednesday, June 3.
Rajiv Raipancholia, CEO of Orient Exchange, says there are several reasons behind this depreciation of rupee which include the government's growing foreign exchange needs to meet its external obligations and bilateral debt payment to G20 nations among others.
Pakistan's forex reserves fell $59 million to $18.744 billion on May 8, mainly on account of external debt repayments, according to the country's central bank.
"The pandemic, which has led to travel restrictions, has put a halt to exports from Pakistan. Due to this, the country may face a shortage of US dollars. Other reasons are to do with lesser incoming remittances and foreign investment expected," said Raipancholia.
Copyright © 2021 Khaleej Times. All Rights Reserved.