The Pakistani Rupee (PKR) crashed below the 225 level against the US Dollar (USD) during intraday trade today.
It depreciated by 1.30 percent against the USD and closed at Rs. 224.92 after losing Rs. 2.92 in the interbank market today. The local unit quoted an intra-day low of Rs. 226.25 against the USD during today’s open market session. This is the highest intraday drop in over three years. Since 11 April, the greenback is up by Rs. 40.96 against the PKR.
The rupee closed in red against the dollar for the second consecutive day today as the market expects the rupee to remain under pressure until there is political stability and clarity about the government. According to Fitch Ratings, political volatility cannot be excluded and could undermine the authorities’ fiscal and external adjustment, as happened in early 2022 and 2018, particularly in the current environment of slowing growth and high inflation.
Fitch Ratings stated that limited external funding and large current account deficits (CADs) have drained foreign exchange (FX) reserves, as the State Bank of Pakistan (SBP) has used reserves to slow currency depreciation. Liquid net FX reserves at the SBP declined to about $10 billion or just over one month of current external payments by June 2022, down from about $16 billion a year earlier.
Later on Tuesday night, the State Bank of Pakistan (SBP) said that the recent movement in the Rupee is a feature of a market-determined exchange rate system under which the current account position, relevant news items, and domestic uncertainty determine daily currency fluctuations.
The central bank said that globally, the US Dollar has surged by 12 percent in the last 6 months to a 20-year high, as the Federal Reserve has aggressively raised interest rates in response to rising inflation, and like most advanced and emerging market currencies across the world, the Rupee has depreciated by 18 percent against the US Dollar since December 2021.
Globally, oil prices soared about 1 percent on Wednesday, with global benchmark Brent settling at a two-week high in volatile trade the other day as traders were concerned about tight supplies and a weaker dollar.
Brent crude was up by 1 percent at $105.5 per barrel, while the US West Texas Intermediate (WTI) gained on Friday’s momentum by 1.6 percent to $102.3 per barrel.
The PKR reported losses against the other major currencies in the interbank market today. It lost 77 paisas against the Saudi Riyal (SAR), 79 paisas against UAE Dirham (AED), Rs. 2.84 against the Euro (EUR), and Rs. 3.11 against the Pound Sterling (GBP).
Moreover, it lost Rs. 2.33 against the Australian Dollar (AUD) and Rs. 3.21 against the Canadian Dollar (CAD) in today’s interbank currency market.
