Rupee Devaluation: Depreciating currency needs strong support

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The Pakistani rupee depreciation after the Pakistan Election 2018 is affecting different sectors in the country.

The rupee devaluation significantly observed in the last few months. It was even started in the former finance minister Ishaq Dar’s tenure as he kept the rupee overvalued. However, when Imran Khan became the PM after victory of PTI, the Pakistani rupee much devalued against the US dollar.

The newly formed government refrained itself from the misadventure in the stock exchange rate era with the result that demand and supply in the inter bank market assessed the rupee valuation.

Just the day before PTI came in government, rupee was at 124.05 against the US dollar in the interbank market.

It remained range-bound for less than 8 weeks not because external-sector fundamentals became solid. It was that because SBP had already corrected the course of the overvalued rupee in the last few months.

If Saudi Arabia pours in $1-2bn more, as the government is expecting, that might help in keeping the rupee stable.

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