Rupee Loses Further Ground Against US Dollar Ahead of IMF Meeting

The Pakistani Rupee (PKR) continued to lose ground against the US Dollar (USD) and posted losses during intraday trade today.

It depreciated by 0.57 percent against the USD and closed at Rs. 221.92 after losing Rs. 1.25 in the interbank market today. The local unit quoted an intra-day low of Rs. 222.125 against the USD during today’s open market session.

The local unit was bearish from the beginning when trade resumed early in the morning against the greenback and traded between 219-223 level in the open market at 10:40 AM. By midday, the greenback went as high as 219.75 against the rupee. After 2 PM, the local unit was trading at the 220-223 level against the top foreign currency before the interbank close.

The rupee slid against the US dollar for the sixth consecutive day today as the ongoing flood situation, the anticipation of today’s meeting of the International Monetary Fund’s (IMF) Executive Board, and the dollar’s rampant climb against other currencies in the international market piled the pressure on the money markets.

During the last session, the dollar reached Rs. 230 in the open market and Rs. 220 in the inter-bank market, which was around Rs. 208 and Rs. 212 in the previous week. However, within a few days, the greenback gained Rs. 8 against the local unit in the inter-bank market and Rs. 22 in the open market.

According to some forex market sources and economic experts, there are many reasons for the depreciation of the rupee, including the withdrawal of the import ban on luxury items, dollar smuggling to Afghanistan, and dollar hoarding.

It is pertinent to mention that Pakistan has yet to receive good news from the IMF and more importantly, various debt servicing agreements with friendly nations are linked to the lender.

Globally, oil prices soared on Monday, building on last week’s gain, as imminent OPEC+ output cuts and conflict in Libya and a strong US dollar forecast a dire outlook for oil markets across the world. Saudi Arabia, the top OPEC producer, last week raised the prospect of production cuts, which sources said could coincide with an increase in supply from Iran if it strikes a nuclear deal with the West.

Brent crude was up by 0.28 percent at $101.3 per barrel, while the US West Texas Intermediate (WTI) stayed above $90 and went up by 0.74 percent to settle at $93.75 per barrel.

Crude oil prices have risen this year, with Brent approaching a record high of $147 in March as Russia’s invasion of Ukraine exacerbated supply concerns. Since then, rising concerns about high-interest rates, inflation, and recession risks have weighed on the market.

The PKR reversed gains against some of the other major currencies in the interbank market today. It gained 64 paisas against the Canadian Dollar (CAD), Rs. 1.33 against the Pound Sterling (GBP), and Rs. 1.56 against the Australian Dollar (AUD).

Conversely, it lost 23 paisas against the Euro (EUR), 34 paisas against the UAE Dirham (AED), and 34 paisas against the Saudi Riyal (SAR) in today’s interbank currency market.