Rupee loses 9pc against dollar
KARACHI, June 26: The rupee lost about 9 per cent of its value against the US dollar in the outgoing fiscal year in the wake of fast erosion of foreign exchange reserves and huge trade gap.
During the last 40 days the local currency became more vulnerable tumbling by 3.5 per cent against the greenback.
Analysts cited dollar’s regaining of global strong position due to depreciation of euro, which is still haunted by debt crisis in Europe, as the key
reason behind sharp weakening of the rupee.
However, they said the rising trade gap, erosion of foreign exchange reserves, widening of current account deficit and drying up of dollar inflows had also contributed in the fall of the rupee.
“The import cover based on SBP forex reserves from 4.2 months at the start of this fiscal year has reduced to 3.2 months. This kept rupee under pressure during FY12, depreciating by 9 per cent from Rs86.1 to Rs94.4,” said Nauman Khan, researcher at Topline Securities.
He said the rupee depreciated by one per cent in FY-11 while the 10-years average depreciation is 4 per cent.
The pressure on the rupee is expected to continue in FY13 with further increase in the debt payment (including US$2.2bn IMF debt
repayment), uncertain Pakistan-US relationship and reduced foreign flows, the research report said.