The Pakistani Rupee (PKR) slid against the US Dollar (USD) and posted losses during intraday trade today.
It depreciated by 0.53 percent and closed at Rs. 220.88 after losing Rs. 1.16 against the greenback. The local unit quoted an intraday low of 220.975 against the greenback.
The local unit was bearish in the morning against the greenback and resumed trade at 219.40 in the open market. By 10:15 AM, the greenback went as low as 219.625 against the rupee. By midday, the greenback went as high as 220.001 against the rupee. After 1 PM, the local unit slid further and stayed at the 220-221 level against the top foreign currency before the interbank close.
The rupee reported losses for the sixth consecutive day today. The currency has been falling for more than a week after snapping its 13-day winning streak on October 12. Meanwhile, it was trading at around 228-241 in the informal market after losses today.
Finance Minister Ishaq Dar said in an interview last week that no specific actions are required to support the country’s currency at this time as traders gain confidence that the new administration will address the country’s financial issues.
Dar said the rupee has been “heavily undervalued. It is because of speculation, and some market participants are to blame”.
Analysts believe the local currency may temporarily settle in the coming week, depending on importers’ demand for the greenback now that the central bank has begun clearance of letters of credit.
Talking to ProPakistani, an expert projected the PKR to nosedive in the coming weeks and possibly hit another low of >250 against the US Dollar in December with a series of debt instruments hitting maturity. With sentiments and speculation gone after Ishaq Dar left for “candle-light dinners” with donors in Washington, fundamentals are the final support keeping the PKR on near-stable levels.
He explained fundamentals such as dollar inflows, investments across various sectors, and export growth can only help, but only for a little while. “Debt payments translate into currency outflows. So, if there’s little support after these payments are made, the PKR will slip further south. December-February very crucial,” he warned.
In terms of global factors, oil prices rose slightly on Wednesday, despite widespread caution, as bullish signals such as falling US crude stocks and a generally oversupplied market were offset by bearish factors such as unclear Chinese demand growth and downward gas prices.
Brent crude was up by 0.93 percent at $90.87 down per barrel, while the US West Texas Intermediate (WTI) rose big by 1.36 percent to settle at $83.95 per barrel.
In the previous session, the contracts fell to their lowest level in two weeks as a result of reports that US President Joe Biden intends to release more barrels from the Strategic Petroleum Reserve (SPR).
Overall, the outlook for European gas prices in the coming months has deteriorated, as have the prospects for switching from gas to oil.
The PKR fell further against the other major currencies in the interbank market today. It lost 31 paisas against the UAE Dirham (AED), 41 paisas against the Canadian Dollar (CAD), 43 paisas against the Pound Sterling (GBP), 85 paisas against the Australian Dollar (AUD), and 90 paisas against the Euro (EUR).
Moreover, it lost 29 paisas against the Saudi Riyal (SAR) in today’s interbank currency market.
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