The Pakistani Rupee (PKR) slid further against the US Dollar (USD) and posted losses during intraday trade today.
It depreciated by 0.41 percent against the USD and closed at Rs. 236.84 after losing 96 paisas in the interbank market today. The local unit quoted an intra-day low of Rs. 236.875 against the USD during today’s open market session.
The local unit was bearish from the opening bell and was trading at 235.50 at 10:10 AM. By midday, the greenback went as low as 236.675 against the rupee. After 2 PM, the local unit stayed at the 236-237 level against the top foreign currency before the interbank close.
The rupee closed in red against the dollar for the eleventh consecutive day today. The floods have by far overshadowed the revival of the International Monetary Fund’s (IMF) program, while the country is also experiencing political instability which has kept investors on their toes. Moreover, dollar smuggling, an increase in the trade deficit, non-materialization of funds from friendly countries, and a lack of investments have all contributed to the rupee’s decline.
Political unrest has persisted in Pakistan since the ouster of Imran Khan’s government. Despite the passage of months, investors have several reservations about the incumbent government’s policies.
The rupee’s value is falling due to the rising import bill, and experts have doubts whether imposing a ban on the import of non-essential and luxury items would help or make things worse. Official statistics reveal the oil import bill increased by more than 7 percent to $3.30 billion in July-August, up from $3.08 billion in the same months last year. Added to it, the food import bill increased by more than 21 percent in the two months under review, from $1.47 billion in the previous year to $1.78 billion in the current period.
Helpless money changers have warned that the PKR could fall to 250 against the dollar if the Ministry of Finance does not intervene. The government should make an immediate appeal to friendly countries for assistance in order to relieve pressure on the rupee.
On the banking side, managers are still reluctantly opening letters of credit (LCs) and impeding the manufacturing industry. If the due process for LCs is not streamlined any time soon, the country’s export base could face a real challenge in the shape of a scarcity of raw materials and related problems.
Globally, oil prices were broadly stable on Friday but on course for a weekly downfall on concerns of heavy interest rate hikes expected to restrict global economic growth and fuel demand.
Brent crude was up by 0.22 percent at $91.04 per barrel, while the US West Texas Intermediate (WTI) went down by 0.02 percent to settle at $85.08 per barrel. Both benchmarks are on track for their third weekly loss in a row, aided in part by a strong US dollar, which makes oil more expensive for buyers using other currencies. The dollar index remained close to last week’s high above 110.
Brent and WTI are both down 20 percent in this year’s third quarter, the worst quarterly percentage decline since the start of COVID in the first three months of 2020.
To recall, Both the IMF and the World Bank have warned that the global economy may enter a recession next year. This is bad news for the demand side of the oil market, and it comes just a day after the IEA issued its forecast on oil demand.
The PKR reversed losses against the other major currencies in the interbank market today. It gained 80 paisas against the Canadian Dollar (CAD), Rs. 1.01 against the Australian Dollar (AUD), and Rs. 1.75 against the Pound Sterling (GBP).
Conversely, it lost 25 paisas against the UAE Dirham (AED), 28 paisas against the Saudi Riyal (SAR), and Rs. 1.10 against the Euro (EUR) in today’s interbank currency market.