Rupee Ends 7-Day Losing Streak Against US Dollar After Oil Drop, Political Clarity

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

It appreciated by 0.11 percent and closed at Rs. 223.42 after losing 24 paisas against the greenback. The local unit quoted an intraday low of 224.58 against the greenback.

The local unit was initially bearish in the morning against the greenback and opened trade at 224 in the open market. By midday, the greenback moved higher against the rupee. After 1 PM, the local unit was red and stayed on the 224 level against the top foreign currency before the interbank close.

The rupee reported gains against US Dollar today after seven consecutive days of losses.

The rupee initially stayed under pressure and did not respond positively to the country’s current account balance improvement.

In October, the current account deficit shrank by 68 percent to $567 million. Money changers are of the view the market is negatively impacted by Pakistan’s growing risk of default on its obligations to repay foreign debt, the delay in IMF-Pakistan negotiations, and the lack of a timetable for incoming financing from friendly countries.

The current account deficit has narrowed, but exports and remittances have suffered significantly. Inflows have slowed, and traders are waiting for the World Bank to send in aid funds, which are critical at this time. The rupee is expected to remain under pressure, according to traders, despite today’s surge.

Amid political turmoil, Pakistan holds its breath for a new army chief and the outcome of former premier Imran Khan’s arrival in Rawalpindi by the end of this week.

Globally, oil prices rose on Tuesday after top exporter Saudi Arabia said OPEC+ would stick to output cuts and could take additional steps to balance the market, outweighing concerns about the global recession and China’s rising COVID-19 case numbers.

Saudi Arabian Energy Minister Prince Abdulaziz bin Salman was also quoted by state news agency SPA on Monday as denying a Wall Street Journal report that OPEC was considering increasing output, sending oil prices down by more than 5 percent.

At 4:45 PM, Brent crude was up by 1.42 percent at $88.69 per barrel, while the US West Texas Intermediate (WTI) was up by 1.44 percent to settle at $81.19 per barrel.

Crude oil prices are making an attempt to recoup their losses. The fact that Saudi Arabia has denied any discussions about increasing oil supply with OPEC and its allies has helped the market today.

The PKR was bullish against most of the other major currencies in the interbank market today. It gained six paisas against the UAE Dirham (AED), seven paisas against the Saudi Riyal (SAR), 27 paisas against the Canadian Dollar (CAD), 27 paisas against the Euro (EUR), and 54 paisas against the Australian Dollar (AUD).

Conversely, it lost 16 paisas against the Pound Sterling (GBP) in today’s interbank currency market.