The US dollar did not let rupee to reap any gains against it and dealt it a heavy blow soon after losing some value in the morning session. The greenback made a comeback and appreciated by Rs2.19 in the interbank trading on Wednesday, reported 24NewsHD TV channel. 

The US dollar which started shedding its value before Eid holidays showed the same downward trend on the first day of business activity after a break of five days today and lost 41 paisas in its value by 10:30am. But soon the robust dollar dragged down the rupee and by the close it was appreciated by Rs2.19 to reach Rs210.10 in the interbank trading. 

https://twitter.com/StateBank_Pak/status/1547168583679184896

The greenback delivered some heavy blows to the Pakistani currency during the first week of this month but towards the end, it lost eight paisas in its value on Thursday (July 7) and settled for Rs207.91.

https://twitter.com/StateBank_Pak/status/1544988793886883841

In order to contain inflation and halt the depreciation of Pakistani rupee, the State Bank on last Thursday (July 7) increased the key interest rate by 125 basis points, taking it to 15% amid expectation of further tightening due to a higher inflation outlook.

In an interview with Bloomberg, SBP Acting Governor Murtaza Syed said that with inflation at multi-year highs around the world, Pakistan was taking timely, bold and decisive steps to cool its economy and prevent a de-anchoring of inflation expectations. 

It was observed that after the announcement of the Memorandum of Economic and Financial Policies (MEFP) received from IMF for the combined 7th and 8th reviews on June 28, the rupee started its upward trajectory against the greenback in the interbank market. But as the days go by and the IMF deal seems to be in the doldrums, the market sentiments keep oscillating to the negative region. 

On top of that, the media reports that Prime Minister Shehbaz Sharif would slash petrol prices soon in conjunction with dropping brent oil prices internationally have made the stalled IMF tranche even more remote. 

According to economic experts, the rupee that has lost 30% of its value against the US dollar in FY22 may lose a bit more value in FY23 because no impactful improvement in the external sector can take place within a year. Besides this, the exceptionally large trade deficit of $48.2 billion in FY22 is putting pressure on rupee.

Reporter Ashraf Khan