Rupee Loses 6th Day in a Row as US Dollar Black Market Gets Out of Control

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

It depreciated by 0.11 percent and closed at Rs. 224.65 after losing 25 paisas against the greenback. It quoted an intraday low of 225 against the greenback before close.

The local unit was bearish against the greenback and opened trade in the 224 range 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 the interbank close.

The rupee reported losses against the US Dollar sixth day in a row today, with PKR/USD rates touching as high as 250 in the informal/black market. The State Bank of Pakistan’s (SBP) limitations on foreign currency in order to maintain the government’s shrinking reserves have created a shadow market for US dollars in Pakistan.

Money changers are saying the formal market is going through arguably its biggest dollar crunch since Zia ul Haq’s era. Immigrant workers are using the black market as it offers better profits. Remittances are expected to clock in at lower levels with November’s data just around the corner.

Our channel checks are telling us that companies that are facing challenges while getting their transactions cleared by SBP are regularly tapping into the black market. The informal market boom is expected to worsen as analysts cite the February-June 2023 period as a reckoning for dollar hoarders.

Globally, oil prices fell on Monday, intensifying a multi-week decline, as a weakening global economy offset supply issues caused by confusion regarding Russian production cuts.

At 3:35 PM, Brent crude dropped by $0.50 or 0.66 percent to reach $75.60 per barrel, while the US West Texas Intermediate (WTI) was still red at $70.63 per barrel. Brent and WTI fell to their lowest levels since December 2021 last week, as investors worried about the impact of a global recession on oil demand.

The looming EU embargo on Russian crude could increase energy price risks in the coming months. However, supply uncertainty should subside by spring 2023, following the expiration of the oil product embargo earlier this year.

The PKR was bearish against some of the other major currencies in the interbank market today. It lost six paisas against both the Saudi Riyal (SAR) and the UAE Dirham (AED), and 10 paisas against the Australian Dollar (AUD).

Conversely, it held out against the Pound Sterling (GBP), gained 56 paisas against the Canadian Dollar (CAD), and 67 paisas against the Euro (EUR) in today’s interbank currency market.

  • PML N and PDM destroyed this country, tearing its flesh and sucking on its bones. Congratulations to Pakistanis. Get ready to die an agonizing and painful death just because you people refused to do something about the situation sitting in your rooms and sipping chai. Guess why; there will be no chai hereafter only hot water that burns your innards.

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