The Pakistani Rupee (PKR) once again reversed gains against the US Dollar (USD) and posted losses in the interbank market today.
It depreciated by 0.55 percent against the USD and closed at Rs. 210.95 after losing Rs. 1.15 in the interbank market today. The local unit quoted an intra-day low of Rs. 211.04 against the USD during today’s open market session. Since 11 April, the greenback is up by Rs. 28 against the PKR.
The rupee closed in red against the dollar today despite Pakistan’s staff-level agreement with the International Monetary Fund (IMF) for the disbursement of $1.17 billion through the lender’s Extended Fund Facility (EFF) program for the South Asian nation.
The rupee’s depreciation is mostly due to an uncontrolled increase in imports paired with a significantly slower rate of progress in exports. The trade deficit, which reached $48 billion in the fiscal year 2021-22, reflects this.
Meanwhile, the central bank’s foreign exchange reserves have fallen to $9.717 billion, down $99 million compared to $9.816 on June 30 mainly due to due to external debt payments and oil import bills. The import cover, which measures a country’s capacity to pay for imported goods in international currency, is at just 5 weeks.
Economic Analyst, A. H. H. Soomro, told ProPakistani,
In the IMF’s staff level agreement, the lender had indicated the continuation of a market-determined exchange rate to ensure SBP doesn’t dry up USD reserves in defending the current account until fundamentals – imports & loan inflows/outflows – drive it. Thus, it is a short-term pressure, and given the commodity slowdown led by Fed tightening and Chinese growth slowdown, we expect CAD to improve the translation into rupee stability.
Globally, oil prices rose on Friday after a US official told Reuters an immediate Saudi oil production boost is not expected, with further support from indications that the US central bank could raise interest rates less aggressively than initially predicted.
Despite this week’s tight physical oil market, Brent crude was up by 2.23 percent at $101.3 per barrel, while the US West Texas Intermediate (WTI) recovered from yesterday’s losses by 1.86 percent to $97.56 per barrel.
The PKR reversed gains against most of the other major currencies in the interbank market today. It lost 30 paisas against the Saudi Riyal (SAR), 31 paisas against UAE Dirham (AED), 57 paisas against the Pound Sterling (GBP), and 97 paisas against the Euro (EUR).
Conversely, it gained 19 paisas against the Australian Dollar (AUD) and 41 paisas against the Canadian Dollar (CAD) in today’s interbank currency market.