The Rupee throughout the year 2017 gave resistance against any downward movement but fell prey to external pressures emanating from heavy debt repayments and fewer Foreign Investment Inflows trickling into the country.
The Dollar started the journey around 104.60 rupee and closed around 110.42 at year end, showing a gain of nearly 5.6 percent or in simple words the domestic currency weakened by the same amount in 365 days. During 2017, Dollar gained almost 5.6 percent against the local currency.
The Rupee shed weight on July 5th of the outgoing year and ended at Rs 108.25 prompting State Bank to defend the currency devaluation which generated a lot of controversy. Central Bank in its post depreciation press release mentioned that currency was down because of the whopping current Account Deficit which reached to significant highs because of widening of Trade Deficit.
Due to an intervention from the then Finance Minister Ishaq Dar the Government clipped the sudden decline setting up a commission to investigate the issue in depth. Pakistan’s Trade Deficit continues to remain skewed towards Imports despite government’s numerous measures.
Trade deficit during the Fiscal Year ended June 30, 2017 widened by 32 billion dollars, which is by far the largest deficit incurred by the country in its 70 year history.
However, the ouster of Finance Minister after allegations of misconduct and unfair usage of his post for personal financial gains landed him in court, the market was on its own. Following the cases against him initiated by National Accountability Bureau, market dynamics took control of the Foreign Exchange Rate and Rupee succumbed to daily demand of importers and payments on external fronts.
Dollar has gained nearly 5.82 rupees during 2017.
The Rupee made heavy dents in almost four sessions during which it lost more than five percent. The outlook for 2018 appears to be gloomy as country at the current moment needs more than 6 billion Dollars to be paid during the six months ending June 30, 2018 while another Three to Four billion dollars might be needed from July to December 2018.
“It would be anybody’s guess as to what should the true realistic value of Rupee be in future but the market talk reveals that currency in next six to eight months might settle between Rs. 112 to Rs. 118 to a dollar. Pakistan in order to pay for the subsequent payments requires help in one way or another: Be it by some miracle that Pakistan receives a hefty amount of Foreign Investment, another Bond Auction in Global Capital market, privatization of some loss making entities, assistance from World Bank and Asian Development or help from China”, said an analyst.
