Rupee Nears Rs280 Against Dollar Amidst Export Concerns and Saudi Support
Karachi – The Pakistani rupee is poised to breach the Rs280 mark against the US dollar, though a dealer in the interbank market anticipates any dip will be temporary. The currency has steadily appreciated during the current fiscal year, falling from Rs284.27 on july 31 to Rs280.42 on the last trading day of the outgoing week.
The potential for the rupee to fall below 280 has raised concerns, with Faisal Mamsa, CEO of Tresmark, warning it “could destabilise export-based industries,” suggesting a mild depreciation would be a more suitable path.
Recent support came from Saudi Arabia‘s rollover of a $3 billion loan, which experts believe will bolster the rupee’s position.However, Pakistan’s exports continue to decline, falling 15.4% in November, contributing to a $37.2 billion trade deficit for the first five months of the fiscal year.
Despite pressure from exporters for devaluation to improve competitiveness, experts caution against the strategy, citing past episodes that failed to substantially increase exports. One dealer noted the US dollar has already lost approximately 12% against major international currencies, with the rupee helping to maintain relative dollar stability locally.
The rupee experienced a sharp devaluation, dropping from 180 to 300 against the dollar in two years, but this did not result in a substantial export boom or structural economic advancement, according to Mr. Mamsa. He also pointed out that the IMF has de-emphasized Real Effective Exchange Rate (REER) as a primary exchange rate indicator as 2018, yet exporters continue to lobby for devaluation.
