RECORDER REPORT
KARACHI: Uncertainty pertaining to the International Monetary Fund (IMF) programme revival pushed the rupee further into ‘oblivion’ against the US dollar, as the local currency closed over 205 for the first time in the inter-bank market on Tuesday.
The rupee settled at Rs205.16, a depreciation of Rs1.3 or 0.63% against the greenback, as the currency market factored in further uncertainty after the IMF said that additional measures will be needed to bring Pakistan's budget for FY2022-23 in line with the key objectives of its programme.
On Monday, the local currency had depreciated Rs1.51 or 0.74% to close at Rs203.86.
Market experts are of the view that multiple factors, including the IMF programme, are driving rupee's depreciation against the greenback.
“There is uncertainty pertaining to the IMF programme revival,” Saad Hashmey, Executive Director at BMA Capital, told Business Recorder. "Oil prices remain high and are trading above $120 per barrel. Furthermore, there is a global economic slowdown which is being reflected locally as well,” he said.
Hashmey said the global economic upheaval would hit Pakistan's exports and remittance inflows, which witnessed a decline last month.
“The commodity market would have to follow the expected drop in demand, but at present, the prices remain high,” he said.
Meanwhile, Asad Rizvi, ex country head at Chase Manhattan, said that the economic uncertainty is denting market sentiment.
“In difficult times when the economic outlook is uncertain, market confidence is flattened,” he said.
Rizvi said that IMF is asking to do more, thus the State Bank of Pakistan (SBP) should step in to communicate with the market, “as a volatile condition is not likely to ebb and hence, rupee will continue to wobble”.
Addressing a conference, Finance Minister Miftah Ismail on Monday also said that the world perceived the country at a serious default risk and Pakistan bond is being sold at below 80 cents.
He said other lenders have linked their loans to the IMF programme and during a meeting the World Bank has told him this, and the same was also conveyed by the Asian Development Bank (ADB) as well.
Pakistan is halfway through a $6-billion, 39-month IMF programme that has stalled over the lender's concerns over the status of some of its objectives, including fiscal consolidation.
The next tranche that Pakistan is to receive upon a successful review is $900 million, and a green light from the IMF would also open up other global funding avenues.
Pakistan urgently needs funds in the face of dwindling foreign exchange reserves, which have reached $9.2 billion - enough for less than 45 days of imports.
Open-market movement
In the open market, the PKR lost 2 rupees for buying and 1.50 rupees for selling against USD, closing at 205 and 206.50, respectively.
Against Euro, the PKR remained unchanged for both buying and selling, closing at 213 and 215, respectively.
Against UAE Dirham, the PKR lost 40 paisas for both buying and selling, closing at 56.10 and 56.60, respectively.
Against Saudi Riyal, the PKR lost 50 paisas for buying and 40 paisas for selling, closing at 54.60 and 55, respectively.
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Open Bid Rs 205.00
Open Offer Rs 206.50
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Interbank Closing Rates: Interbank Closing Rates For Dollar on Tuesday
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Open Bid Rs 205.30
Open Offer Rs 205.50
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RUPEE IN LAHORE: The Pak rupee continued losing ground against the US dollar for the second straight day and declined to another historic low of Rs205.50 in the open currency market on Tuesday.
The short supply phenomenon of the greenback continued to prevail in the market for another day which helped its all-time high appreciation for buying and selling at Rs 204.00 and Rs 205.50 against the overnight close of Rs 203.00 and Rs 204.50, respectively, local currency dealers said.
However, the rupee continued gaining streak for the second consecutive day against the pound sterling. Consequently, the pound’s buying and selling rates further rose declined from Monday’s close of Rs 249.00 and Rs 251.00 to Rs 248.50 and Rs 250.50, respectively, they added.
Copyright Business Recorder, 2022
