Dollar Continues Its Rise Against the Rupee Nearing Another Historic High

Dollar continued it’s upward trajectory against the Pakistani Rupee as it touched an intraday high of Rs. 168 in interbank on Tuesday.

Pakistan Rupee (PKR) fell sharply in today’s trading as the dollar closed at Rs. 167.89, up by Rs. 0.91 from the previous closing rate in the interbank.

“This dollar rally is mainly foreign driven. Some analysts anticipate that around $150 million worth of T-Bills were sold on Monday alone, and may have been triggered by IMF skipping the review of 3rd tranche. We’ve seen a steady flight of investment, but this could be slowing down as only around $900 million now remains. However, we expect to hear big news on the multilateral front which may be comforting for the markets,” said Eman Khan, an analyst at Tresmark, an application that tracks financial markets.

A.A.H Soomro, managing director at Khadim Ali Shah Bukhari Securities while talking with ProPakistani stated,

The regional currencies are under tremendous pressure because of outflows in equity and debt capital markets from global investor. The only safest haven these days is USD and is strengthening globally.

He further added that the outflows in Pakistan are also emancipating from capital outflows. “From trade deficit perspective, things are still controllable. Pakistan would surely get debt restructured and more disbursement from IMF, WB and ADB would lead to currency strengthen. Once the curve flattens, we should see debt inflows to kick in as the double digit is still attractive in a negative-yielding world,” stated Soomro.

Dollar to Rise Further?

Adnan Sami Sheikh, a senior market analyst anticipates that Dollar will continue to rise further against the Rupee. He said that other emerging market countries are facing even more pressure as foreigners are selling and taking their dollars out and the same is happening with Pakistan.

It is pertinent to mention that during March, the Pakistani Rupee fell to a historic low of Rs. 169.50, with State Bank of Pakistan intervening to provide a huge supply of USD in the market at that time which lent support to the Rupee.

The rupee had remained stable between October 2019 and March 2020 and was trading in the range of 154-156 under the market-based exchange rate regime.

In March, The State Bank of Pakistan (SBP) lowered policy rate by a cumulative 225 basis points to 11 percent in two monetary policy announcements in a week, which had put a dent on Foreign investors sentiments as they resorted to panic selling of the treasury bills.

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