Rupee Recovers Against US Dollar Despite Sudden SBP Reserves Drop

The Pakistani Rupee (PKR) recovered against the US Dollar (USD) and reported gains in the interbank market today. The local currency gained 23 paisas against the greenback at the close of the session today.

It appreciated by 0.23 percent against the USD and closed at Rs. 185.63 today after losing 42 paisas and closing at Rs. 185.87 in the interbank market on Thursday, 28 April. The domestic currency hit an intra-day low of Rs. 185.7 against the USD during today’s open market session.

The rupee reversed losses against the dollar today despite news that Pakistan’s reserves took another blow. According to data published by the State Bank of Pakistan (SBP) on Thursday, the country’s total liquid foreign exchange reserves went down by $376.7 million (-2.2 percent) on April 23, 2022, to $16.668 billion, compared to $17.045 billion in the previous week. The SBP reserves decreased by $328 million to $10.55 billion (-3.0 percent), compared to $10.88 billion a week earlier.

Globally, oil prices rose for the fourth consecutive day today as concerns over the Russian supply disruption outweighed COVID-19 lockdowns in China, the world’s largest crude importer. At the time of filing this report, Brent crude futures stayed above $109 a barrel, while the US West Texas Intermediate (WTI) crude futures sat comfortably above 106 a barrel.

Discussing the local currency’s performance earlier during the day, the former Treasury Head of Chase Manhattan Bank, Asad Rizvi commented that the PKR opened weaker as compared to the previous closing. Due to the higher import bill, the balance is tilting. Moreover, CPI inflation has crossed SBP’s upper tolerance band, and while net reserves with the central bank fell to $10.56 billion nearing a crucial level, that needs to be pushed higher to support PKR.

The PKR reversed losses against most of the other major currencies and reported gains in the interbank currency market today. It gained six paisas against both the Saudi Riyal (SAR) and the UAE Dirham (AED), 39 paisas against the Australian Dollar (AUD), 54 paisas against the Euro (EUR), and 83 paisas against the Pound Sterling (GBP).

Conversely, it lost 47 paisas against the Canadian Dollar (CAD) in today’s interbank currency market.

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