Rupee recovers

KARACHI: The rupee recovered on Friday to close slightly higher due to improved dollar inflows and slowing demand from importers.

The rupee ended at 166.91 to the dollar in the interbank market, a 0.04 percent stronger than the previous close of 166.98.

In the open market, the rupee ended unchanged at 167.90 per dollar.

Dealers said the improvement in dollar supplies and some respite in the importer dollar demand helped the local unit recouped losses.

The rupee was under pressure due to the growing demand for the US dollar, rising imports, and a higher trade deficit. The rupee performed the worst among major Asian currencies, losing 9 percent against the dollar.

The net outflow of dollars to Afghanistan after the exit of the US forces also weighed on the local unit.

August 2021 trade deficit of $4.06 billion is the highest ever monthly number. The last high was $3.77 billion in June 2018.

“So with this rate, the country's current account deficit (CAD) may easily cross $10 billion, at minimum. And the worst case could be a higher CAD than $14 billion for FY2022,” said Khurram Schehzad, the CEO of Alpha Beta Core.

“And then, if we have to keep GDP growth at 4-5 percent (without needed fiscal and energy reforms), CAD may go up further, ending up at $18-19 billion in FY23, the same level as the last year of the last government.”