#Usd to rupee driver

Currency dealers were also concerned that the International Monetary Fund ( IMF) would halt its lending to the country while a new government was formed.

The USD/PKR pair traded between 176 and 182 in the first quarter but began to slump in April, when Prime Minister Imran Khan was ousted in a no-confidence vote and the government collapsed. Pakistan’s foreign currency reserves have been eroded further in 2022 as the country’s central bank, the State Bank of Pakistan (SBP), has been using reserves to slow currency depreciation. PKR accelerates slide against USD in 2022 Local media reports indicated that $2m in dollars had been taken across the border from Pakistan into Afghanistan daily following the US withdrawal in August 2021 and the collapse of the Afghan banking system, contributing to a shortage of dollars in Pakistan. The devaluation of the rupee accelerated in the second half of 2021, with the USD/PKR exchange rate breaching the 200 level for the first time in May 2021, ending the year at 176.20. By the end of 2020, the rupee was trading at 160, with the Covid-19 pandemic driving up the value of the dollar. It weakened over the summer to a record above 163, ending the year around 155.

The country has faced ballooning current and fiscal account deficits and repeated devaluations of the currency, which shifted from a managed rate against the US dollar to a free-floating exchange rate in 2018.īy the start of 2019, the US Dollar/Pakistani rupee rate was trading around 140. The Pakistani rupee has been in a long-term decline against the US dollar since the start of 2018 when it traded around the 110 level.

#Usd to rupee driver

Monetary policy on using higher interest rates to combat soaring inflation has also been a key driver for the dollar, with a series of interest rate hikes making the dollar more attractive for investors. The dollar acts as a safe haven for investors during times of economic and geopolitical uncertainty, which has been evident in 2022 as the greenback has soared in value to 20-year highs against a basket of other currencies. That has increased its demand for dollars and weakened the value of the rupee.Īs the world’s reserve currency, the value of the US dollar is driven by sentiment on the global economy as well as economic activity in the US. The trade deficit widened by 55.7% in the year to June 2022 in dollar terms as imports grew by 24%, according to data from Pakistan’s Bureau of Statistics. The country’s imports have soared in the post-pandemic recovery. Pakistan is a consumption-based economy, relying on imports of commodities such as plastic, steel and chemicals for its manufacturing industry. These all determine the country’s attractiveness as an investment destination and the potential for the national currency to rise in value. The value of a currency tends to be driven by the issuing nation’s economic growth, monetary policy (such as interest rates), and cross-border trade balance. The number of rupees needed to buy one dollar reached a record high of 240.15 on 28 July. In forex trading, the US dollar/Pakistan rupee (USD/PKR) currency pair represents how much of the quote currency – the rupee – is needed to buy one unit of the base currency – the US dollar. What drives the value of the currencies and what is the outlook for the rupee? In this article, we look at the performance of the Pakistani rupee against the US dollar, as well as the latest USD/PKR predictions and forecasts. PKR remains down by around 30% since the start of the year, as the strength of the greenback has created a challenging environment for emerging markets currencies.

The Pakistani rupee ( PKR) has continued on a downward spiral against the US dollar ( USD) after a brief rebound in August.Īs of 19 September, the rupee has erased its gains made in August and early September to trade around the 240 level – the mark hit on 28 July. The currency hit a record low in late July, when it experienced its worst weekly fall since 1998 as a consequence of a shortage in foreign currency reserves, slowing economic growth and political instability. USD/PKR forecast: will the rupee continue to weaken?.PKR accelerates slide against USD in 2022.

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