Off the RaDar: Rupee Slides 3rd Day in a Row As Uncertainty Rattles Markets

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

It depreciated by 0.02 percent against the USD and closed at Rs. 218.43 after losing five paisas in the interbank market today. The local unit quoted an intra-day low of Rs. 219.375 against the USD during today’s open market session.

The local unit was all red when trade resumed against the greenback and opened trade at 218.75 in the open market. By 10:15 AM, the greenback went as low as 217.75 against the rupee. By midday, the greenback went as high as 219 against the rupee. After 2 PM, the local unit was still red and stayed at the 219 level against the top foreign currency before the interbank close.

The rupee continued to lose against the US Dollar third day in a row today.

Our channel checks received mixed messages from money changers who seemed worried about where the rupee was headed this time. Since Dar’s arrival as Pakistan’s financial frontman, the money market has recovered over Rs. 20 against the US dollar in just two weeks. But it started falling on Wednesday after Dar left for meetings in Washington, prompting traders to notice a slight discrepancy in whether the rupee was being artificially controlled for point-scoring or if it was due to another greenback shortage.

It is pertinent to mention that Monday, on the eve of the PKR slowdown, the State Bank of Pakistan (SBP) denied any role in the strengthening of the Pakistani Rupee (PKR) against the US Dollar (USD) and refuted claims that it had sold any dollars in the market.

Experts suggest that the central bank had released dollars into the market from its own wallet, some quoting almost $200 million in separate packets every 48 hours which were then used to maintain the exchange rate. They said the disbursal was enough for less than 15 days, hence the PKR started falling this week and may fall as low as 230 within the next 10 days unless the central bank intervenes with a more constructive execution.

Interestingly, foreign exchange reserves held by SBP decreased by $303 million or 3 percent on a weekly basis, according to data released by State Bank on Thursday.

Globally, oil prices slid on Friday, despite support from a significant reduction in the OPEC+ supply target and a weaker dollar offset by global recession fears and weak oil demand in China.

Brent crude was down by 0.69 percent at $93.92 per barrel, while the US West Texas Intermediate (WTI) went down by 0.76 percent to settle at $88.43 per barrel.

Both the Brent and WTI contracts oscillated between positive and negative territory on Friday but were down about 4 percent for the week after two weeks of gains due to global economic concerns. The US dollar fell from recent highs this week, making dollar-denominated commodities cheaper for holders of other currencies.

The PKR continued to drop against the other major currencies in the interbank market today. It lost one paisa against the UAE Dirham (AED), four paisas against the Saudi Riyal (SAR), 80 paisas against the Canadian Dollar (CAD), Rs. 1.38 against the Euro (EUR), and Rs. 4.66 against the Pound Sterling (GBP).

Moreover, it dropped Rs. 1.03 against the Australian Dollar (AUD) in today’s interbank currency market.