Rupee Collapses As Dollar Drought and IMF Uncertainty Spoil FATF News

The Pakistani Rupee (PKR) crashed to a new all-time low against the US Dollar (USD) and posted losses in the interbank market today.

It depreciated by 0.58 percent against the USD and closed at Rs. 209.96 after losing Rs. 1.21 in the interbank market today. The local unit hit an intra-day low of Rs. 211.21 against the USD during today’s open market session. Since the arrival of the new government on 11 April, the greenback is up by Rs. 27.56 against the PKR.

The rupee closed in red against the dollar today after traders rushed to buy dollars on reports that some commercial banks had run out of the greenback. Adding fuel to the fire, uncertainty was also fueled after the Financial Action Task Force (FATF), on Friday, said that Pakistan has substantially completed its two action plans but has not been officially removed from the FATF’s grey list.

Pakistan and the International Monetary Fund (IMF) have failed to develop a staff-level agreement on the restoration of the Extended Fund Facility (EFF), putting authorities in a difficult position to bridge the gap and approve the amended federal budget for the fiscal year 2022-23 through the National Assembly.

The finance ministry expected to finalize the staff-level agreement by Sunday (June 19) on the basis of revenue and spending measures that might result in a Rs. 152 billion surplus in next year’s primary budget, but the agency roadblock has extended and put immense pressure on the economy.

Globally, oil prices were stable on Monday despite last week’s losses as the market balanced tightening supplies with concerns about slowing global growth. Industry experts believe a recession is more likely after the US Federal Reserve approved the largest interest rate increase on Wednesday in more than a quarter of a century to stem inflation.

Brent crude settled back above $113 in early trading hours, while the US West Texas Intermediate (WTI) settled just below $110 at $109.7 per barrel.

The PKR dipped further against the other major currencies in the interbank market today. It lost 32 paisas against the Saudi Riyal (SAR), 32 paisas against the UAE Dirham (AED), 57 paisas against the Canadian Dollar (CAD), 51 paisas against the Pound Sterling (GBP), and 82 paisas against the Australian Dollar (AUD).

Moreover, it lost Rs. 1.75 against the Euro (EUR) in today’s interbank currency market.