Rupee Crashes Against US Dollar as Forex Reserves Reach Dangerous Levels

The Pakistani Rupee (PKR) continued its fall against the US Dollar (USD) and reported losses in the interbank market today. The local currency lost Rs. 1.04 against the greenback at the close of the session today.

It depreciated by 0.56 percent against the USD and closed at Rs. 186.97 today after losing Rs. 1.48 and closing at Rs. 185.92 in the interbank market on Wednesday, 20 April. The domestic currency hit an intra-day low of Rs. 186.75 against the USD during today’s open market session.

In the last four trading sessions, the local unit has lost 2.93 percent of its value against the dollar.

The rupee continued its sharp decline against the dollar today after oil prices soared on Thursday on supply chain fears as the European Union ponders a potential ban on Russian oil imports, days after scarce supplies from Libya rattled the market. At the time of filing this report, Brent crude futures rose $1.53, or 1.43 percent, to $108.3 a barrel, while the US West Texas Intermediate (WTI) crude futures gained $1.07, or 1.05 percent, to sit at 103.3 a barrel.

At home, the central bank’s weekly report released on Thursday revealed that the country’s total liquid foreign exchange reserves went up by $16.9 million (+0.1%) on April 16, 2022, to $17.045 billion, compared to $17.028 billion in the previous week. The SBP reserves increased by $36.1 million to $10.88 billion (+0.3%), compared to $10.85 billion a week earlier.

Discussing the local currency’s performance earlier during the day, the former Treasury Head of Chase Manhattan Bank, Asad Rizvi said that the PKR is under severe pressure, as forex reserves have slipped to a dangerous level. Payments in the last quarter of FY22 are sizeable that require additional funding and quick arrangements, as exports and remittances support may not be enough.

INTER BANK#PKR is under severe pressure,as Fx RESERVES have slipped to a dangerous level, hope today’s data does not disappoint.Payments in last quarter of FY22 is sizeable that requires additional funding & quick arrangements,as Exports & Remittances support may not be enough.

— Asad Rizvi (@asadcmka) April 21, 2022

The PKR continued its fall against the other major currencies and reported losses in the interbank currency market today. It lost 27 paisas against the Saudi Riyal (SAR) and 28 paisas against the UAE Dirham (AED).

Moreover, it lost Rs. 1.15 against the Australian Dollar (AUD), Rs. 2.04 against the Canadian Dollar (CAD), Rs. 2.42 against the Pound Sterling (GBP), and Rs. 2.96 against the Euro (EUR) in today’s interbank currency market.