Rupee Drops 5th Day in a Row Against US Dollar As Pressure Mounts

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

It depreciated by 0.08 percent and closed at Rs. 225.82 after losing 18 paisas. It quoted an intraday low of 226.785 against the greenback before close.

The local unit was all red against the greenback fifth day in a row and opened trade at 225.75 in the open market. By midday, the greenback moved lower against the rupee. After 1 PM, the local unit dropped and stayed on the 226 level against the top foreign currency before going back to the 225 level at the interbank close.

The rupee reported losses against the US Dollar today with informal rates hovering above 250. Today’s drop comes with cheap politics, bad governance and external pressures roiling markets at home.

The International Monetary Fund (IMF) has prodded Pakistan to allow its currency to regain its true value amid tighter currency controls that have created a black market for dollars while also deterring foreign inflows through traditional channels.

However, the coalition government has refused, claiming that the State Bank of Pakistan (SBP) was not dumping sacred dollars in the interbank market. According to sources, IMF Mission Chief to Pakistan Nathan Porter urged the government to implement the market-based exchange rate in a meeting with Finance Minister Ishaq Dar on Thursday.

Globally, oil prices rose over 3 percent on assumptions of a decrease in Russian crude supply.

At 4:45 PM, Brent crude was up by $2.94 or 3.63 percent to reach $83.92 per barrel, while the US West Texas Intermediate (WTI) was also green at $79.56 per barrel.

International media reported that Russia may reduce oil output by 5%-7% in early 2023 in response to price caps, Deputy Prime Minister Alexander Novak said on Friday. Russia’s Baltic oil exports could fall by 20 percent in December compared to the previous month after the European Union and G7 nations imposed sanctions and a price cap on Russian crude beginning on December 5. A massive winter storm was sweeping across the United States, canceling thousands of flights and disrupting travelers’ plans during what was expected to be a busy holiday season.

The PKR was bearish against all of the other major currencies in the interbank market today. It held out against the Pound Sterling (GBP), lost three paisas against the Saudi Riyal (SAR), and four paisas against the UAE Dirham (AED).

Moreover, it lost 14 paisas against the Euro (EUR), 36 paisas against the Canadian Dollar (CAD), and 63 paisas against the Australian Dollar (AUD) in today’s interbank currency market.