Pakistan’s rupee continued to sustain losses against the US dollar for the fourth successive session, settling with a depreciation of 0.9% on Wednesday.

As per the State Bank of Pakistan (SBP), the rupee closed at 223.42 after declining by Rs2 against the greenback.

On Tuesday, the rupee had registered a loss for the third successive session, closing at 221.42 after declining by Rs1.56 or 0.7% against the greenback.

Analysts say the decline in rupee value comes on the back of a surge in demand for dollars in the local market, amid the government’s decision to allow the duty-free import of edible items to ensure food security after floods devastated the country’s agricultural sector.

However, the dollar is also gaining strength internationally, hitting a 24-year peak against the yen and reaching new highs versus the Australian and New Zealand dollars on Wednesday after U.S. economic data reinforced the view that the Federal Reserve will continue aggressive policy tightening.

The US dollar index, which measures the greenback against six major peers, strengthened 0.08% to 110.43, sticking close to Tuesday’s 20-year high of 110.57.

“Dollar gaining strength internationally is one of the major reasons impacting the rupee,” wrote Abdullah Umer, an analyst at Ismail Iqbal Securities, in a note on Wednesday.

Fahad Rauf, Head of Research at Ismail Iqbal Securities Limited, said a number of other factors are also contributing to the rupee’s decline.

“The Real Effective Exchange Rate (REER) has inched above 100 due to rising inflation and dollar gaining strength in the international market,” Rauf told Business Recorder.

“Moreover, in the open market, there is a high demand for dollars especially from travellers to the UAE after some recent policy changes.”

Rauf informed that there is also a high demand for dollars from Afghanistan, which is evident from the high rates being offered in the Peshawar open market.

Meanwhile, oil prices, a key determinant of currency parity, fell more than $1 on Wednesday to their lowest since before Russia invaded Ukraine as COVID-19 curbs in top crude importer China and expectations of more interest rate hikes spurred worries of a global economic recession and lower fuel demand.

Inter-bank market rates for dollar on Wednesday

BID Rs 223.50

OFFER Rs 224.50

Open-market movement

In the open market, the PKR lost one rupee for both buying and selling against USD, closing at 232 and 234, respectively.

Against Euro, the PKR lost one rupee for both buying and selling, closing at 231 and 233 respectively.

Against UAE Dirham, the PKR lost 20 paisas for both buying and selling, closing at 64.20 and 64.70, respectively.

Against Saudi Riyal, the PKR lost 20 paisas for both buying and selling, closing at 61.70 and 62.20, respectively.

Open-market rates for dollar on Wednesday

BID Rs 232

OFFER Rs 234