Pakistani rupee ended the calendar year 2020 as the worst performing currency in Asia, even underperforming peer South Asian currencies such as the Sri Lankan Rupee and Bangladeshi Takka. In contrast, most currencies have either appreciated against the US dollar in the last 12 months or retained their value.
Pakistani rupee was down 3.4 per cent at the year end against the US Dollar as compared to appreciation of other Asian currencies such as the Chinese Yuan, Philippines peso, South Korean won, Malaysian ringgit and Thai baht. The rupee closed around Rs160.189 a dollar on Thursday.
The only currency which has marginally underperformed against the Dollar is the Indian rupee (falling by 2.5%), as the country’s economy struggles amid COVID19 Pandemic.
Other than India and Pakistan, the Sri Lankan Rupee (which is significantly dependent on tourism) is the only other currency in South Asia that has depreciated in 2020, dipping 2.3%.
Bangladeshi Takka, managed to remain stable during the year as it appreciated by 0.2% at 2020 end vis-a-vis US Dollar to stand at 84.67/USD. Similarly, Afghanistan’s Afghani also appreciated by 1% against US Dollar.
The currencies of Afghanistan, Bangladesh and Nepal remained stable in comparison with Pakistan’s. One Dollar exchange rate with some Asian countries is as follows: Afghanistan’s Afghanis 77.3, Indian Rupee 73.14, Bangladeshi Takka 84.68, Thai Baht 30. Turkish Lira remained only other functional currency to depreciate significantly by 25% against US Dollar as Tourism in the country declined amid COVID19 and US Pushes major embargo against Turkey.
Pakistani Rupee remained volatile during the Year as it marked a low of Rs. 153.85/USD and high of Rs. 168.41/USD before recovering to Rs. 160.189/USD at year end.
US Dollar against major currencies weakened during the year as Euro, British Pound, Australian and Canadian Dollars, Chinese Yuan and Japenese Yen all appreciated against the Dollar.
Pakistan’s Central Bank has admitted that currency interventions are not just about managing volatility anymore and are enabling the orderly evolution of the exchange rate into market based mechanism.
Going onwards, the persistence of rare current-account surplus following muted Debt payments and the global oil-price collapse will help stabilize the rupee around current levels.
The improvement in Pakistan’s external account has eased some of the impact caused by the pandemic. While low oil prices are supporting Pakistan’s terms of trade, a bigger impact on the current account may continue to come from reduced demand for both oil and non-oil imports.
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