Pakistani Rupee's Depreciation 'Large Part of Global Phenomenon': SBP

While reacting to the constant fall of the Pakistani Rupee against the US Dollar, the State Bank of Pakistan (SBP) on Tuesday said that local currency’s depreciation against the greenback was “in large part of global phenomenon.” The statement came after the Pakistani Rupee witnessed a fall of Rs. 6.79 on 19^th July.

“The recent movement in the Rupee is a feature of a market-determined exchange rate system.” the central bank said in a series of Tweets. “Under this system, the current account position, relevant news items, and domestic uncertainty together determine daily currency fluctuations.” it added.

“Recent Rupee depreciation against the US$ is also in large part a global phenomenon.” said the central bank. “Globally, the US$ has surged by 12% in the last 6 months to a 20-year high, as the Fed has aggressively raised interest rates in response to rising inflation.” it added.

2/4 Recent Rupee depreciation against the US$ is also in large part a global phenomenon. Globally, the US$ has surged by 12% in the last 6 months to a 20-year high, as the Fed has aggressively raised interest rates in response to rising inflation. pic.twitter.com/Ng6jxwC0LJ

— SBP (@StateBank_Pak) July 19, 2022

“Like most advanced and emerging market currencies across the world, the Rupee has depreciated against the US$ since Dec 21.” it said, adding that Pakistani Rupee has depreciated by 18% over this period. “In real effective terms—i.e. against a basket of currencies in which Pakistan trades & adjusting for inflation—depreciation in the Rupee since Dec 21 has only been 3%.” it added.

4/4 In real effective terms—i.e. against a basket of currencies in which Pakistan trades & adjusting for inflation—depreciation in the Rupee since Dec 21 has only been 3%. This is a better measure of the strength & competitiveness of a currency than the US$ rate. pic.twitter.com/GAecEIHAud
— SBP (@StateBank_Pak) July 19, 2022