The State Bank of Pakistan (SBP) Tuesday said that the recent movement inthe Rupee is a feature of a market-determined exchange rate system underwhich the current account position, relevant news items, and domesticuncertainty determine daily currency fluctuations.
In a series of tweets, the central bank said that the recent depreciationof Pakistani Rupee against the US Dollar is also in large part a globalphenomenon.
The central bank said that globally, the US Dollar has surged by 12 percentin the last 6 months to a 20-year high, as the Federal Reserve hasaggressively raised interest rates in response to rising inflation.
It said that like most advanced and emerging market currencies across theworld, the Rupee has depreciated by 18 percent against the US Dollar sinceDec 21.
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The central bank added that in real effective terms—i.e. against a basketof currencies in which Pakistan trades and adjusting forinflation—depreciation in the Rupee since Dec 21 has only been 3 percent.This is a better measure of the strength and competitiveness of a currencythan the US Dollar rate.
It is pertinent to mention here that Rupee shattered all previous recordson Tuesday, falling to a new low of 221.99 against the US Dollar. The localcurrency fell by Rs. 6.79 in the interbank market, depreciating by 3.06percent against Monday’s close of Rs. 215.20.