Rupee Struggles Against Major Currencies Despite IMF Announcement

The Pakistani Rupee (PKR) continued its losing streak against the US Dollar (USD) and posted losses in the interbank market today. It lost four paisas against the greenback after hitting an intra-day low of Rs. 176.35 against the latter during today’s open market session.

It depreciated by 0.02 percent against the USD and closed at Rs. 176.22 today after losing 26 paisas and closing at 176.18 in the interbank market on Tuesday, 18 January.

The rupee reported losses against the dollar for the second consecutive day after the announcement that the International Monetary Fund (IMF) had convened its next meeting of its Board of Directors for Pakistan for 28 January for the revival of the $6 billion Extended Fund Facility (EFF). The completion of the review will make SDR 750 million (about $1,059 million) available, which will bring the total disbursements under the EFF to about $3,027 million.

Regardless of today’s interbank value shredding, experts forecast the local unit to gain traction in the coming few weeks with a few promising fiscal indicators lined up by the government.

It is noteworthy that Pakistan has authorized four international banking institutions, namely Credit Suisse, Deutsche Bank, Dubai Islamic Bank, and Standard Chartered Bank, as Joint Lead Managers (JLMs) and Joint Bookrunners (JBRs) to organize a series of investor calls for the issuance of a seven-year Sukuk. The benchmark offering will be US dollar-denominated and falls under the government’s target of raising Rs. 560 billion through the issuance of the bonds during the current financial year.

Discussing the rupee’s near-term outlook earlier in the day, the former Treasury Head of Chase Manhattan Bank, Asad Rizvi, explained in a tweet that “[The] IMF board is meeting on JAN 28th, USD denominated Sukuk bond is likely to be issued soon, there is a whisper in the market that exports will do well by [a] few billions. Last year[‘s] import bill was up by $11.5bn & this year pressure is immense. It should be contained within”.

The PKR struggled against other major currencies and reported losses in the interbank currency market today. It lost one paisa against both the Saudi Riyal (SAR) and the UAE Dirham (AED), two paisas against the Australian Dollar (AUD). and 16 paisas against the Canadian Dollar (CAD) in today’s interbank currency market.

Conversely, it posted gains of 84 paisas against the Euro (EUR) and 68 paisas against the Pound Sterling (GBP).