On Thursday, the US dollar climbed to a 10-month high, breaking the PKR164 barrier.

The dollar has appreciated against the rupee since May for a number of reasons, including widening current account and Trade deficits.

Pakistan’s Current Account position has started to deteriorate after remaining in a comfortable position in the first 11 months of FY2021. However, in June-2021, the Current Account slipped into a deficit of $1.6bn. While analysts believe the July-2021 Current Account to be in deficit to the tune of ~$700mn – $800mn

Previously, the Rupee had been strengthening against the dollar since August-2020 when it traded at 168 against USD. Since then it saw appreciation till June-2021. However, the pressure is back on Rupee since July-2021 as the trade deficit is being witnessed at a record level.

Since mid-May 2021, the dollar has appreciated 7.15% against the local currency, driving up the prices of imported goods and creating uncertainty about the stability of the exchange rate.

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