Rupee Drops 12th Day in a Row After Dar’s Default Comments Hurt Markets

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

It depreciated by 0.07 percent and closed at Rs. 227.12 after losing 17 paisas. It quoted an intraday low of 227.475 against the greenback before close.

The local unit was all red against the greenback 12th day in a row and opened trade at 227.00 in the open market. By midday, the greenback moved lower against the rupee. After 1 PM, the local unit was still bearish and stayed at the 227 level against the top foreign currency before the interbank close.

The rupee reported losses against the US Dollar today after Finance Minister Ishaq Dar said China and Saudi Arabia will help Pakistan avoid default. Money changers said these and other similar comments by the top government official hurt sentiments of the market where trade assumed a bearish charge all day.

Dar said on Wednesday that the International Monetary Fund (IMF) program would be completed at any cost, that China and Saudi Arabia would increase their support, that government-to-government (G2G) disinvestments would be completed, and that the current account deficit would be about $3 billion less than previously projected.

Dar also said that many countries tax foreign exchange earnings. He claimed that various agencies were already working to combat the smuggling of foreign currency and other commodities such as wheat and fertilizer.

Globally, oil recovered on Thursday after posting the biggest two-day loss for the start of a year in three decades, with a US fuel pipeline shutdown providing support, though economic concerns limited gains. Concerns about a global recession drove sharp declines in the previous two days, especially since short-term economic indicators in the world’s two largest oil consumers, the United States and China, appeared weak.

At 4:25 PM, Brent crude was up by $1.58 or 2.03 percent to reach $79.42 per barrel, while the US West Texas Intermediate (WTI) was also green at $74.36 per barrel.

The cumulative declines of more than 9 percent in both benchmarks on Tuesday and Wednesday were the largest two-day losses at the start of a year in 3 decades. The nearby contracts of the two benchmarks traded at a discount to the next month, indicating near-term bearishness.

The PKR was bearish against most of the other major currencies in the interbank market today. It lost four paisas against the UAE Dirham (AED), five paisas against the Saudi Riyal (SAR), 61 paisas against the Euro (EUR), and Rs. 1.39 against the Canadian Dollar (CAD).

Conversely, it gained 31 paisas against the Pound Sterling (GBP), and 54 paisas against the Australian Dollar (AUD) in today’s interbank currency market.

Published by
Ahsan Gardezi