Rupee expected to see depreciation of Rs2-3 against dollar from July

The Pakistani rupee is projected to depreciate against the US dollar in July due to a rise in import activities, according to experts cited by The News. In the near term, the local currency is anticipated to remain relatively stable. In the past week, the rupee experienced minor fluctuations against the dollar.

Factors contributing to this expected depreciation include:

1. Increased Imports: Higher import volumes typically increase demand for foreign currency, in this case, the US dollar, putting downward pressure on the local currency.
2. Trade Deficit: A larger trade deficit, driven by more imports than exports, can lead to a devaluation of the local currency as more dollars are needed to pay for imports.
3. Economic Policies: Government and central bank policies aimed at managing inflation, interest rates, and foreign exchange reserves can also impact the rupee’s value.
4. Global Economic Conditions: International economic trends and geopolitical events can influence exchange rates. For instance, fluctuations in global commodity prices, especially oil, can significantly affect the Pakistani economy and its currency.

For individuals and businesses involved in foreign trade or holding assets in different currencies, understanding these dynamics is crucial for managing financial risks.