Rupee Rises 8th Day in a Row Against US Dollar After Dar Makes ‘LegenDary’ Claim

The Pakistani Rupee (PKR) rose further against the US Dollar (USD) and posted big gains during intraday trade today.

It appreciated by 0.73 percent against the USD and closed at Rs. 225.64 after gaining Rs. 1.65 in the interbank market today. The local unit quoted an intra-day low of Rs. 229.50 against the USD during today’s open market session.

The local unit was all green on the opening bell and was trading at 226 at 10 AM. By midday, the greenback went as low as 229 against the rupee. After 2 PM, the local unit went up and stayed at the 225-226 level against the top foreign currency before the interbank close.

The rupee continued its good run against the dollar for the eighth consecutive day today as sentiments rather than fundamentals continue to drive the currency toward growth. Broadly, the local unit surged after Finance Minister Ishaq Dar’s comments on exchange rates.

He said Monday that the real value of the US dollar is below Rs. 200 and with the right policy measures the Pakistani rupee will grow stronger in the coming months. Speaking in Geo New program Capital Talk, the finance minister said that the US dollar will eventually come below Rs. 200.

Dar remarked that the value of the rupee has been manipulated and warned speculators of strict action. He mentioned that the British pound dropped to an all-time low against the dollar recently but added that despite the rise of the US dollar, the rupee will strengthen as it is currently undervalued.

While sentiments are nice and offer a good taste to wait out the storm, long-term projections for PKR don’t look good. According to a Bloomberg report, the likeliness of Pakistan experiencing a cash crunch in the next 12 months has risen to more than 50 percent.

The probability of a currency-crisis episode involving a very large devaluation of the nominal exchange rate and a massive decline in forex reserves could rise to around 59 percent by June 2023, up from 29 percent in August.

A currency crisis means a very large depreciation and extensive forex exchange depletion.

Globally, oil prices soared on Tuesday on assumptions that OPEC+ will agree to a large cut in crude output at its meeting this week, while strong demand and upcoming restrictions on Russian crude also aided prices.

Brent crude was up by 0.74 percent at $89.52 per barrel, while the US West Texas Intermediate (WTI) soared by 0.54 percent to settle at $84.08 per barrel.

Reuters reported that the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, are expected to cut output by more than 1 million barrels per day (bpd) at their first in-person meeting since 2020 on Wednesday.

In a late statement, Kuwait’s oil minister stated that OPEC+ would make an appropriate decision to ensure energy supply while also serving the interests of producers and consumers.

The PKR gained higher against some of the other major currencies in the interbank market today. It gained 26 paisas against the Euro (EUR), 44 paisas against the UAE Dirham (AED), and 45 paisas against the Saudi Riyal (SAR).

Conversely, it lost 63 paisas against the Canadian Dollar (CAD), 70 paisas against the Australian Dollar (AUD), and Rs. 2.30 against the Pound Sterling (GBP) in today’s interbank currency market.

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