Rupee hits new record low

KARACHI: The rupee extended its fall for a second straight session on Friday on fears of higher-than-expected current account deficit and a persistent fall in the country’s foreign exchange reserves, analysts said.

The rupee closed at a new record low of 176.77 to the dollar, It closed at 176.42 versus the greenback in the previous session. The local unit fell by 0.20 percent during the session.

The rupee dropped 10.88 percent so far this fiscal year while it depreciated 13.85 percent since its high of 152.28 in May.

“Higher than expected imports leading towards huge expected current account deficit for the month of November,” said Tahir Abbas, the head of research at Arif Habib Limited, referring to the continual pressure on the rupee.

Pakistan’s foreign exchange reserves declined one percent to $22.5 billion as of November 26. The reserves held by the State Bank of Pakistan were down 1.5 percent to $16 billion. With monthly imports of around $8 billion, reserves are sufficient to cover two months of imports versus 3.3 months in August.

“I think a very large trade deficit number for the month of November has shaken confidence in PKR,” said Faizan Ahmed, an independent analyst.

“The current account deficit for the month will be very high. Due to the rising trade deficit, SBP has seen some deterioration in its reserves lately and hence the pressure on the rupee.”

The level of real effective exchange rate recorded in October suggests that there should be some improvement in the rupee going forward, Ahmed added.

In the open market, the local unit lost 1.50 rupees to close at 179.50 per dollar.