Rupee Plummets Against Major Currencies as Business Optimism Index Takes a Hit

The Pakistani Rupee (PKR) depreciated against the US Dollar (USD) and posted losses in the interbank market today. It lost 38 paisas against the greenback after hitting an intra-day high of Rs. 174.15 against the USD during today’s open market session.

It depreciated by 0.22 percent against the USD and closed at Rs. 174.89 today after losing three paisas and closing at 174.50 in the interbank market on Tuesday, 8 February.

Today’s losses come a day after Dun and Bradstreet Pakistan released a report detailing that business optimism declined across the board in the country, with the trading sector registering the largest drop in optimism during the fourth quarter of 2021 (4Q2021).

The report highlighted in its ninth edition of the ‘Business Optimism Index’ (BOI) study that the BOI registered 143.9 points in 4Q2021 compared to 154.2 points in 3Q2021, indicating a decline of 6.7 percent quarter-on-quarter (QoQ).

It showed that the decline in optimism was driven by the overall downtrend in the macroeconomic indicators, and read: “High inflation rate of 12.3 percent in December 2021, the widening of the current account deficit by 57.9 percent, increased policy rates from 7.25 percent to 9.75 percent, depleting foreign exchange reserves from $25.6 billion to $24 billion, and depreciation of the Pakistani Rupee against the US Dollar by 4.5 percent during Q4 2021, may have affected the business community and impacted their business outlook”.

A sector-wise comparison of the data showed that the trading sector BOI exhibited the highest decline of 18.7 percent QoQ, and the BOI declined from 160.9 in 3Q2021 to 130.9 in 4Q2021. However, the index increased by 5.3 percent year-on-year (YoY). The report attributed the decline to pandemic-related supply chain disruptions in anticipation of the spread of the Omicron variant in 1Q2022.

The PKR continued its bad run against the other major currencies and reported losses in the interbank currency market today. It lost nine paisas against the Canadian Dollar (CAD), 10 paisas against both the Saudi Riyal (SAR) and the UAE Dirham (AED), 75 paisas against the Pound Sterling (GBP), and 79 paisas against the Australian Dollar (AUD).

Moreover, it lost 62 paisas against the Euro (EUR) in today’s interbank currency market.