Rupee Slides Further Against US Dollar As Politics, Bond Yields and IMF Cause Panic

The Pakistani Rupee (PKR) slid to a new low against the US Dollar (USD) during intraday trade today.

It depreciated by 0.68 percent against the USD and closed at Rs. 228.37 after losing Rs. 1.89 in the interbank market today. The local unit quoted an intra-day low of Rs. 228.25 against the USD during today’s open market session. Since the regime change, the greenback is up by Rs. 44.40 against the PKR.

The rupee ended this week with another record low against the dollar for the fourth consecutive day. Critics blame the rupee’s prolonged depreciation on political instability caused by the outcome of the Punjab by-elections, a reduction of Pakistan’s ratings from stable to negative by Fitch Ratings, and a delay in the International Monetary Fund’s (IMF) program.

Bears took control of market trends despite Finance Minister Miftah Ismail’s reassurances on forex stability by August. The finance minister explained on Thursday that the central bank has no role in the recent depreciation of the Pakistani Rupee. The minister added that he expects the rupee to stabilize against the US Dollar in the next month.

He claimed said that the high import bill during the last month was one of the reasons for the pressure on the rupee. He admitted that the political crisis following PMLN thumping in the recent by-elections also contributed to the pressure on the rupee, but expects the import bill to moderate for July which is expected to be less due to lower fuel imports.

Shockingly, Miftah feels that the economy is on the right track and that the rupee would appreciate against the dollar once political stability returns, which has been unclear since the coalition government’s takeover.

Globally, oil prices slid on Friday on a weakening global demand outlook and the resumption of some Libyan crude oil in the international market. According to data released on Friday, the global economy is on the verge of a severe recession, just as central banks aggressively reverse ultra-loose monetary policies implemented during the epidemic to maintain growth.

After briefly going up, Brent crude was down by 1.13 percent at $102.7 per barrel, while the US West Texas Intermediate (WTI) plunged below yesterday’s level after futures depreciated by 1.35 percent to settle at $95.0536 per barrel.

The PKR ended the week with more losses against the other major currencies in the interbank market today. It lost 42 paisas against the Saudi Riyal (SAR), 42 paisas against UAE Dirham (AED), 96 paisas against the Euro (EUR), and Rs. 2.76 against the Pound Sterling (GBP).

Moreover, it lost Rs. 1.86 against the Canadian Dollar (CAD)and Rs. 2.32 against the Australian Dollar (AUD) in today’s interbank currency market.