The Pakistani Rupee (PKR) fell to another new all-time low against the US Dollar (USD) and depreciated by 10 paisas against the greenback in the interbank market today. It hit an intra-day low of Rs. 178.15 against the USD during today’s open market session.
The PKR depreciated by 0.06 percent against the USD and closed at Rs. 177.98 today after it posted blanket gains of one paisa and closed at 177.88 in the inter-bank market on Tuesday, 14 December.
The local currency has lost 12.97 percent on a fiscal-year-to-date basis after recording another historic low today besides depreciating by 11.35 percent on a calendar-year-to-date basis. It failed to live up to market expectations despite the State Bank of Pakistan’s (SBP) monetary policy decision driving multiple financial instruments to perform well across the board today.
It plummeted today on the back of the SBP’s monetary policy decision to raise the policy rate by 100 basis points to 9.75 percent from 8.75 percent. The central bank said in its Monetary Policy Statement that the decision to raise the policy rate was taken to “counter inflationary pressures and ensure that growth remains sustainable”.
As opposed to the exchange ledger, the Pakistan Stock Exchange (PSX) had a different reaction to the SBP’s interest rate revision. Bulls took control of the PSX on Wednesday, with the benchmark KSE-100 index surging over 1,200 points in intraday trading. Investor sentiments were bolstered on the back of the central bank’s forecast that future monetary policies will remain mostly unaltered as the economy gets a feel for positive growth.
Market analysts and experts forecast a major focus for the rupee-dollar parity to shift towards the upcoming mini-budget that will be announced soon. This instrument is expected to help withstand the storm of inflationary pressures, and perhaps shed light on how the local unit will progress in the midst of the near-term economic uncertainty.
Regarding the local unit’s tumble to another historic low, the former Treasury Head of Chase Manhattan Bank, Asad Rizvi, remarked, “For PKR moves, focus will shift on mini-budget. Per policy, if $13bn or 4% CAD to GDP is OK as funding arrangements are available, then [the] market will follow domestic AGRI growth/int’l commodity prices & imports. [A] complacent approach or higher prices will not be sustainable”.
The PKR maintained its declining trend against most of the other major currencies as well. It posted losses of Rs. 1.07 against the Pound Sterling (GBP), two paisas against the Australian Dollar (AUD), and six paisas against the Euro (EUR).
It also posted blanket losses of two paisas against both the UAE Dirham (AED) and the Saudi Riyal (SAR) in today’s interbank currency market.
Conversely, it appreciated against the Canadian Dollar (CAD) and posted gains of 41 paisas in today’s interbank currency market.
