December 31, 2019 (MLN): Pak rupee has witnessed depreciation of 11.51% against the US dollar in departing year i.e. CY2019 where the rupee today traded at Rs154.84 against the greenback in the interbank market.
During the year, it made a low of Rs164 on Jun 26, down by 18.14% and high of Rs138.22 on Feb 6 when compared to the previous year’s close of Rs138.86.
The highest devaluation of rupee against USD in CY19 was first seen on May 21, the rupee slipped in by 7.44% in last 4 trading days, from Rs141.39 to Rs 151.92, while the second one was observed on June 26 where rupee fell by 4.05% to clock in at Rs162.16.
Another round of depreciation was noted on June 14 (rupee weakened by 2%). Similarly, an increase of 1.16% in USD against PKR was recorded on June 27 to Rs164.05.
It is pertinent to mention that the PKR has been relatively stable since Pakistan entered into IMF program under the EFF. Upon the IMF’s conditionality, the government has switched from managed to the flexible exchange rate which helped to restore competitiveness, rebuild official reserves and provide a buffer against external shocks.
On the upside, the PKR first showed the sign of appreciation against USD since Jun 28, the rupee strengthened by 3.25% to close at Rs154.84 today.
Real Effective Exchange Rate Index (REER) remained below 100 in CY19. At present, the REER decreased by 5.59% YoY in Nov 2019 to a provisional value of 95.81 from value of 101.49 on Nov 18. During the year, a low REER of 89.74 was recorded in the month of Jul 19 as IMF approved a 39 month extended arrangement under the EFF.
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