Rupee drops against dollar

KARACHI: The Pakistani rupee continued to decline against the US dollar in the interbank market on Wednesday.The rupee closed at 283.55 per dollar, compared with the previous close of 283.41.

In the open market, the rupee also lost more ground, trading at 285.58 against the dollar. It had ended at 285.4 on Tuesday.Dealers said the local unit continued to decline due to increased dollar demand from importers and companies to fulfil their obligations. These payments are typically higher in June, the end of the fiscal year.

Pakistan’s real effective exchange rate (REER) fell to 97.8 in May, down from 99.3 in the previous month. Both the depreciation of the Pakistani rupee and lower inflation compared to trading partners have contributed to the decline in the REER index in recent months, according to analysts.

The country’s current account turned into a $103 million deficit in May from a $47 million surplus in April, driven by higher imports and a decline in exports.The deficit stood at $235 million in May 2024.Pakistan recorded a current account surplus of $1.8 billion during the 11 months of the fiscal year ending in June, in contrast to a deficit of $1.6 billion in the same period last year.

Imports of goods rose to $5.478 billion in May from $5.225 billion in the previous month and $5.014 billion a year before. Imports increased to $54.085 billion in July-May FY25, up 11 per cent from a year earlier.

Exports fell 6.0 per cent month-on-month and 19 per cent year-on-year, totalling $2.43 billion. However, from July to May in FY25, exports rose to $29.69 billion, representing a 4 percent increase compared with the same period last year.