The Pakistani rupee (PKR) extended losses against the US Dollar and dropped further during intraday trade today.
The Pakistani rupee was largely bearish during the early hours of intraday trade today with the interbank rate initially gaining ~Rs. 2 to reach 280.25 by 11 AM. By 1:25 PM, it dropped below 285.
At close, the PKR depreciated by 0.44 percent to close at 285.04 after losing Rs. 1.24 during intraday trade today.
The rupee reported losses today as markets brace for Tuesday’s monetary policy review of the State Bank of Pakistan (SBP) and are calling for another hike of at least 200 basis points.
The rupee is down nearly Rs. 54 since January 2023. Since April 2022, it is down over Rs. 103 against the greenback. As per exchange rate movements witnessed today, the PKR has lost observed a drop of over Rs. 1.24 against the dollar.
At its last meeting on March 2, the MPC raised the policy rate by 300 basis points to the current 20 percent, the highest-ever policy rate since October 1996. The decision was based on higher inflation outcome due to external and fiscal adjustments
According to a poll conducted by Topline Research, the majority of the participants (92.5 percent) expects the policy rate to increase by at least 100 bps.
Money changers say today’s drop reflects market sentiment toward developments that the federal government has started a review of proposals put forth by the Forex Association of Pakistan to increase the country’s foreign exchange reserves.
Forex Association of Pakistan President Malik Bostan had put forth a number of proposals before the Senate Standing Committee on Finance and Revenue last week that included providing the government with $24 billion over the next 24 months.
One disgruntled trader was fuming at the government for contemplating Bostan’s proposal which appears to be political and backed without a viable macroeconomic undertaking.
The PKR was bearish against most of the other major currencies in the interbank market today. It lost 33 paisas against the Saudi Riyal (SAR), 34 paisas against the UAE Dirham (AED), 46 paisas against the Australian Dollar (AUD), and Rs. 1.42 against the Canadian Dollar (CAD).
Conversely, it gained 49 paisas against the Euro (EUR) and 50 paisas against the Pound Sterling (GBP) in today’s interbank currency market.