Rupee Tumbles 4th Day in a Row After Govt Loses Elections, Dar Seeks Cash Relief

The Pakistani Rupee (PKR) shed last week’s gains against the US Dollar (USD) and posted losses today.

It depreciated by 0.21 percent against the USD and closed at Rs. 218.89 after losing 46 paisas in the interbank market today. The local unit quoted an intra-day low of Rs. 219.500 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 219.00 in the open market. By midday, the greenback went as high as 219.25 against the rupee. After 2 PM, the local unit was still red and stayed at the 218 level against the top foreign currency before the interbank close.

The rupee continued to lose against the US Dollar fourth day in a row today. Money changers are doubtful of a PKR comeback unless the government implements stringent policies to overcome the forex slowdown.

A regular trader commented that the market is also reacting to Imran Khan’s Pakistan Tehreek-e-Insaf (PTI) winning six National Assembly seats in a by-election on Sunday that was seen as a direct contest between the former ruling party and the current ruling coalition.

While the market is keeping an eye out for any shifts in monetary adjustments, the local unit is projected to fall further down against the dollar. The State Bank of Pakistan (SBP) has started clearing letters of credit (LCs) of importers but the money changers have said the process could be headed for a pause if another shortage hits the dollar aisle in the coming days.

Exporters are awaiting multilateral donors’ decision on diverting cash inflows toward Pakistan, with a team already in Washington to negotiate terms with prominent lenders and debt sellers.

Finance Minister Ishaq Dar Sunday called for greater policy support from the International Monetary Fund (IMF) and multilateral donors. The currency ‘specialist’ urged IMF to tailor its response to the situation in Pakistan and similar countries, by taking into consideration the serious economic, social, and political challenges that these countries face in the backdrop of climate-induced calamities.

Overall, with multiple debt obligations approaching maturity coupled with unwelcome liquidity bottlenecks, external vulnerability risks, and higher debt sustainability risks, market watchers have warned that Pakistan is silently edging closer toward economic collapse.

Globally, oil prices were stable on Monday as China’s continued loose monetary policy was offset by concerns that high inflation and energy costs would drag the global economy into recession. On Monday, oil prices remained stable as China’s continued loose monetary policy was offset by concerns that high inflation and energy costs would drag the global economy into recession.

Brent crude was up by 0.33 percent at $91.93 per barrel, while the US West Texas Intermediate (WTI) went up by 0.26 percent to settle at $85.83 per barrel.

Oil supply is expected to remain tight after OPEC and allies such as Russia pledged on October 5 to cut output by 2 million barrels per day, as a spat between OPEC’s de facto leader Saudi Arabia and the United States could foreshadow further volatility.

The PKR continued to drop against the other major currencies in the interbank market today. It lost 12 paisas against the UAE Dirham (AED), 12 paisas against the Euro (EUR), and Rs. 1.46 against the Saudi Riyal (SAR).

Conversely, it gained 14 paisas against the Pound Sterling (GBP), 49 paisas against the Canadian Dollar (CAD), and Rs. 1.41 against the Australian Dollar (AUD) in today’s interbank currency market.