The Pakistani Rupee (PKR) reversed gains against the US Dollar (USD) and posted losses in the interbank market today. It lost 15 paisas against the greenback after hitting an intra-day low of Rs. 176.27 against the latter during today’s open market session.
It depreciated by 0.09 percent against the USD and closed at Rs. 176.38 today after gaining 40 paisas and closing at 176.23 in the interbank market on Wednesday, 12 January.
The rupee reversed its winning streak against the dollar over rising inflationary concerns observed at domestic and global levels. According to the World Bank (WB), while economic growth experienced a strong rebound in 2021, it is expected to decline markedly from 5.5 percent last year to 4.1 percent in 2022, and drop to 3.2 percent in 2023.
Inflation has been running at its highest ever rates since 2008 globally and in advanced economies. Given the rapid spread of the Omicron variant, the COVID-19 pandemic will continue to disrupt global economic activity in the near term. The slowdown is expected to coincide with a widening divergence in growth rates between advanced and emerging or developing economies.
Moreover, the global prices of oil, that had risen 50 percent in 2021 (as reported by Reuters), are expected to rise considerably higher this year due to a lack of production capacity and restricted investment in the field, and potentially push oil to $90 or even $100 per barrel.
Discussing the rupee’s near-term outlook earlier in the day, the former Treasury Head of Chase Manhattan Bank, Asad Rizvi, tweeted, “While inflation continues to surge globally, nearly 60% people are feeling the pinch that may not ease in this Q[uar]T[e]R. In Pakistan, too utility cost is sharply up & is adding pressure. Brent oil hovering around $85 adds to price pressure & increases [the] risk to weaken the ECONOMY”.
INTER BANK
While inflation continues to surge globally, nearly 60% people are feeling the pinch that may not ease in this QTR. In 🇵🇰 too utility cost is sharply up & is adding pressure. Brent oil hovering around $85 adds to price pressure & increases risk to weaken the ECONOMY.
— Asad Rizvi (@asadcmka) January 13, 2022
The PKR reversed gains against other major currencies in the interbank currency market today. It posted losses of Rs. 1.92 against the Euro (EUR), Rs. 1.86 against the Australian Dollar (AUD), and Rs. 1.97 against the Pound Sterling (GBP).
Moreover, it lost four paisas against both the Saudi Riyal (SAR) and the UAE Dirham (AED) in today’s interbank currency market.
