Rupee Posts Big Gains Against US Dollar Amid 3-Month High Oil Prices

The Pakistani Rupee (PKR) continued its recovery against the US Dollar (USD) and posted gains in the interbank market today.

It appreciated by 0.37 percent against the USD and closed at Rs. 200.77 after gaining 75 paisas in the interbank market today. The local unit hit an intra-day low of Rs. 201.37 against the USD during today’s open market session.

The rupee closed in green against the dollar for the second consecutive day despite global oil prices nearing three-month highs after parts of Shanghai imposed new COVID-19 protocols, though news of China’s stronger-than-expected exports last month boosted the demand outlook.

Brent crude remained above the $122 level after briefly peaking at $123.49 on Thursday, while the US West Texas Intermediate (WTI) settled above $121 per barrel. It is noteworthy that both benchmarks first closed on Wednesday at their highest since March 8, matching levels seen in 2008.

Pakistan is expected to meet the conditions for the International Monetary Fund (IMF) to resume its bailout program, paving the way for a rebound in the rupee. The loan from the agency will enable the rollover of loans by bilateral creditors including China, and new lending from multilateral creditors along with a combination of bond issuances, FDI, and portfolio inflows.

Forex consolidation is imperative to Pakistan’s economic growth with a variety of factors still impacting progress in the near term. Moody’s Investors Service (“Moody’s”) has affirmed the B3 long-term deposit ratings of Pakistani banks and changed the outlook to negative from stable.

The latest rating actions follow Moody’s decision to change the Government of Pakistan’s B3 ratings to negative from stable on 2 June 2022, and also lower the country’s local and foreign currency country ceilings to B1 and B3, from Ba3 and B2, respectively.

The PKR recovery continued against the other major currencies in the interbank market today. It gained 20 paisas against the Saudi Riyal (SAR), 20 paisas against the UAE Dirham (AED), 31 paisas against the Euro (EUR), and Rs. 1.09 against the Pound Sterling (GBP).

Moreover, it gained 66 paisas against the Australian Dollar (AUD) and 86 paisas against the Canadian Dollar (CAD) in today’s interbank currency market.