Rupee faces slow depreciation.

KARACHI -- The Pakistani rupee has exhibited a gradual decline over the past two working days, hinting at an increase in demand for the US dollar, which could soon surpass the available supply within the domestic economy.

Data from the State Bank of Pakistan (SBP) reveals that the domestic currency depreciated by 0.11%, or Rs0.31, reaching Rs279.43 against the US dollar in the interbank market on Tuesday.

The cumulative depreciation in the rupee amounts to approximately 0.22%, or Rs0.63, over the past two days, suggesting that the currency may stabilise at around Rs280 per US dollar in the near term.

The rupee has been showing signs of renewed depreciation for about a week now. In the six weeks prior to this, it experienced a remarkable rally, gaining 11% or over Rs30, reaching a three-month high at Rs276.83 per US dollar compared to its record low of Rs307.10 in the first week of September 2023.

Market discussions indicate that the demand for foreign currency has been steadily increasing, driven by expectations of economic growth between 2-3% in the fiscal year 2023-24, compared to just 0.3% in FY23. This suggests that imports may rise to support growth in the remaining months of the current fiscal year.

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