Rupee Drops Further Against the US Dollar Despite SBP Decision

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The Pakistani Rupee (PKR) is on a persistent losing streak against the US Dollar (USD) and posted losses in the interbank market today. It lost 22 paisas against the greenback after hitting an intra-day high of Rs. 176.25 against the USD during today’s open market session.

It depreciated by 0.13 percent against the USD and closed at Rs. 176.72 today after losing 25 paisas and closing at 176.49 in the interbank market on Monday, 24 January.

The rupee reported losses against the dollar for the second consecutive day despite the State Bank of Pakistan’s (SBP) unchanged policy rate. Its Monetary Policy Committee (MPC) decided on Monday to keep the policy rate unchanged at 9.75 percent due to certain factors, including the current account deficit and headline inflation which appear to have stopped growing drastically in the last two months.

In a statement, the MPC remarked, “While year-on-year headline inflation is high and will likely remain so in the near term due to base effects and energy prices, the momentum in inflation has slowed with month-on-month inflation flat in December compared to a significant rise of 3 percent in November. Inflation expectations of businesses have also declined considerably.”

Discussing the rupee’s near-term outlook earlier in the day, the former Treasury Head of Chase Manhattan Bank, Asad Rizvi, commented on Twitter that even though the policy rate is unchanged, the SBP seems pleased with the current fiscal and monetary policy mix. However, he warned that factors like oil prices and the current account deficit could impede progress.

The PKR notably reversed its gains against some of the other major currencies and reported losses in the interbank currency market today. It lost six paisas against both the Saudi Riyal (SAR) and the UAE Dirham (AED) in today’s interbank currency market.

Conversely, it gained 33 paisas against the Australian Dollar (AUD), 57 paisas against the Canadian Dollar (CAD), 82 paisas against the Pound Sterling (GBP), and nine paisas against the Euro (EUR).



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