The Pakistani Rupee (PKR) has broken its winning streak against the US Dollar (USD) once again and depreciated by 91 paisas against the greenback in the inter-bank market today. It hit an intra-day low of Rs. 175.12 against the USD during today’s open market session.
The local currency depreciated by 0.52 percent against the latter and closed at Rs. 174.67 today after it posted gains of Rs. 1.12 and closed at Rs. 173.76 in the inter-bank market on Wednesday, 17 November.
Today’s losses follow growing speculations about the outcome of the monetary policy committee that is scheduled for tomorrow. Additionally, the unforeseen developments that have affected the outlook for inflation and the balance of payments continue to add to the monetary shroud over the market.
Regarding the significance of the central bank’s monetary policy instrument, the former Treasury Head of Chase Manhattan Bank, Asad Rizvi, wrote in a news column;
Through its monetary policy instrument, SBP manages the cash flows and changes the cost of money accordingly. When it hikes rate, loans/borrowings/imports become expensive. Yes, it attracts savers.
He also claimed that the policy rate will jump by 100 basis points. “As the year-end approaches, any hike of policy rate will lead to huge losses for Banks/Non-Banks and Corporates that are already holding government paper worth Rs. 16.3 trillion. Nearly half of them are of longer maturity. The impact of T/bills holdings, which is Rs. 8 trillion, will be much less due to early maturity,” he added.
The toughest, and perhaps the biggest hurdle, according to the finance hotshot will be the approval of the SBP Act, 1956. If the parliament fails to sanction amendments in the bill, it is unclear if the International Monetary Fund will continue its program.
The PKR reversed most of its gains against the other major currencies as well and posted losses in the inter-bank currency market today.
It lost a hefty Rs. 1.92 against the Pound Sterling (GBP), 40 paisas against the Australian Dollar (AUD), and 24 paisas against both the UAE Dirham (AED) and the Saudi Riyal (SAR).
The Rupee broke out of its incredible run-of-form with a disappointing tumble against the Euro (EUR) for the first time since Tuesday after it posted losses of Rs. 1.29 against the eurozone currency. It also posted losses of 19 paisas against the Malaysian Ringgit (MYR) and 14 paisas against the Chinese Yuan (CNY).
Furthermore, it posted gains of two paisas against the Canadian Dollar (CAD) in today’s inter-bank currency market.