Rupee Falls Against US Dollar 11th Day in a Row Despite ‘Good News’

The Pakistani Rupee (PKR) struggled against the US Dollar (USD) and posted losses in the interbank market today.

It depreciated by 0.07 percent against the USD and closed at Rs. 200.14 after losing 14 paisas in the interbank market today. The local unit hit an intra-day low of Rs. 201.05 against the USD during today’s open market session. So far, the dollar has gained Rs. 13.45 against the rupee since last week, and Rs. 17.20 since 11 April 2022.

The rupee closed in red against the dollar for a record eleventh day in a row after the government, on Thursday, announced a fresh ban on a plethora of imported items. While the move was initially welcomed by markets as a sign of positive growth in the near term, research suggests the monthly impact of the ban on the import of 38 non-essential “luxury” items will merely be $247 million.

The ban was exercised keeping in view Pakistan’s rising import bill, and extremely volatile current account deficit which narrowed significantly in April to stand at $623 million. Conversely, the country’s total liquid foreign exchange reserves went down by $214.7 million (-1.3 percent) on May 13, 2022, to $16.16 billion, compared to $16.37 billion in the previous week. The central bank’s reserves decreased by $145 million to $10.16 billion (-1.4 percent), compared to $10.30 billion a week earlier. corresponding to an import cover of less than 50 days.

Globally, oil prices regained yesterday’s losses in the early hours of the day as an imminent European ban on Russian oil balanced out investor concerns about economic fallout hitting overall demand. Brent crude edged a few levels to sit at $112.5, while the US West Texas Intermediate (WTI) crude rebounded from yesterday’s blushes to settle at an even $112.

The PKR drop continued against all the other major currencies in the interbank market today. It lost 77 paisas against the Canadian Dollar (CAD), Rs. 1.73 against the Australian Dollar (AUD), Rs. 1.78 against the Euro (EUR), and Rs. 2.32 against the Pound Sterling (GBP).

Moreover, it lost three paisas against both the Saudi Riyal (SAR) and the UAE Dirham (AED) in today’s interbank currency market.