Rupee performance against dollar in last three years

Here is how Pakistani rupee performed against US dollar since July 2018.

KARACHI (Haris Zamir) - Rupee remained under immense stress during the three years of the present government and lost 42.5 percent or Rs 52.27 against US dollar, reaching to all-time high of Rs176.77 on December 3, 2021 where all expectations of financial analysts about rupee under 165 level have been dumped aside.

The delay in getting funds from IMF ultimately slowed down flows from other international financial institutions like World Bank, ADB and other institutions. Moreover, the pace of foreign investments and exports also got slow.

Earlier in September, Fitch’s forecast for the rupee’s average rate this year was 164 to the U.S. dollar compared with 158 previously. For 2022, Fitch now expects an average rate of 180 versus a previous forecast of 165.

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In July 2018, the greenback was at Rs124.188. The next two months August and September saw slight increase as USD closed at 124.249; however, a sharp increase was witnessed in October when the foreign currency gained about 8 rupees and closed at 132.48 followed by another about 7 rupee increase in November to close at 139. Rupee slightly recovered by 10 paisa in December to end the calendar year at 138.9.

The local currency kept its ground in first two months of the next year (2019) and closed at 138.82 at the end of February before depreciating slightly in March to be closed at Rs140.8 against dollar in March, Rs141.4 in April. However, in the next two months, the greenback extended its winning streak and gained about Rs6 in May to close at Rs147.9 and Rs2 in June to close at Rs160.

The local currency started to gain ground from July 2019 and closed at Rs159.6 followed by 156.9 in August, 156.4 in September, 155.7 in October, 155.24 in November and 154.9 in December.

In first two months of 2020, rupee kept its ground against dollar but from March, when coronavirus continued to grip the world, dollar saw a whopping increase of Rs11 and closed at Rs166.7. The rupee gained ground in the next month and closed at Rs160.1 before depreciating again in May and June to close at 163.1 and 168 respectively.

From July rupee kept its ground and closed at Rs166.9 against dollar in July, 166.23 in August, 165.7 in September, Dollar weakened by about 4 rupees in October against rupee and closed at Rs160.26. In November and December dollar closed at Rs159.42 and 159.83.

Start of 2021 was a good start for rupee as dollar closed at Rs160.1 in January, 158.1 in February and 152.76 in March.

However, dollar turned the tide around from April and started to gain ground against rupee. Dollar closed at 153.45 in April, 154.4 in May, 157.54 in June, 162.43 in July, 166.28 in August, 170.65 in September, and 171.65 in October.

The greenback reached historic high in November to close at Rs175.71

Initially, as things started to improve, markets tumbled due to rapid spread of COVID-19 across the world and the global economy faced tremedous downturn with hundreds of countries facing lockdown. Business activities turned negative and even Pakistan economy suffered tremors with growth after 66 years turning to negative.

Huge soaring debts each year with external debt rising every day jolted the whole system. External debt payments, interest payments and Eurobonds maturing also caused great pain to the economy.

External debt during current government soared by $30 billion in three years while in PML-N tenure, the figures rose by $36 billion in five years. Foreign investment dried up almost with selected sectors fetching some small amounts.

Imports gained momentum as opening of economies hiked prices of commodities and the current account deficit ballooned to $5 billion in four months of fiscal year.

Delays from getting funds from IMF and Saudia Arabia also made heavy dents. Another factor which overthrew estimates was sharp rise in commodities prices which accelerated the import bill.

Another shock came from geo-political situation when Taliban took over and it led to rise in smuggling of dollars as the US government froze Afghanistan accounts worth $5 billion.

The loss has been colossal and now reflecting in inflation rate which rose to 11.2 percent in November - the highest in 21 months.

Advisor to Prime Minister on Finace Shaukat Tareen has said recently that the government will issue $1 billion worth of Sukkuk bonds amd the IMF board is also expected to approve over $1 billion in January next year. The State Bank of Pakistan has also received $3 billion from Saudi Arabia next on Saturday.  The above mentioned factors can minimize further depreciation of Pakistani rupee in the coming months.