Rupee Drops Further Against US Dollar As New Rules Confuse Markets

The Pakistani Rupee (PKR) dropped further against the US Dollar (USD) and posted losses during intraday trade today.

It depreciated by 0.02 percent and closed at Rs. 221.69 after losing four paisas against the greenback. The local unit quoted an intraday low of 221.95 against the greenback.

The local unit was bearish in the morning against the greenback and resumed trade at 221.8 in the open market. By midday, the greenback moved marginally higher against the rupee. After 1 PM, the local unit was red and stayed on the 221 level against the top foreign currency before the interbank close.

The rupee reported losses for the second consecutive day against US Dollar today, building up on last week’s decline. The State Bank of Pakistan (SBP) and the government implemented various administrative measures to control exchange rate volatility, however, markets failed to react positively.

Money changers said there was reluctance during trade today with sellers unwilling to move big-value dollar notes and instead opting for smaller currency notes. There’s more demand for the Qatari Rial at the moment with tourists planning long trips to Doha for the FIFA World Cup starting this month.

There’s uncertainty whether the market will bounce back with a mixture of socioeconomic and politically driven bottlenecks creating an obstruction for money movers planning trade accordingly.

Experts view last week’s massive drop in reserves as a significant factor behind today’s slump.

Globally, oil prices fell on Monday, dragged down by a stronger US dollar, while rising coronavirus cases in China dashed hopes of the world’s largest crude importer quickly reopening its economy. It appears that the strength of the US dollar is also weighing on oil and the broader commodities complex.

At 4:15 PM, Brent crude was down by 1.08 percent at $94.95 per barrel, while the US West Texas Intermediate (WTI) was down by 1.27 percent to settle at $87.83 per barrel. Both benchmarks dropped by over $1 today, helped by another drop in US oil inventories and the stale greenback trend against other global currencies.

A weaker US dollar supports oil prices by making the commodity more affordable to buyers holding other currencies.

The PKR was bearish against the other major currencies in the interbank market today. It lost 80 paisas against the Canadian Dollar (CAD), Rs. 1.40 against the Australian Dollar (AUD), Rs. 1.78 against the Pound Sterling (GBP), and Rs. 2.41 against the Euro (EUR).

Moreover, it held out against the Saudi Riyal (SAR) and lost one paisa against the UAE Dirham (AED) in today’s interbank currency market.