Pakistan's rupee breaks four-day losing streak against US dollar

Pakistan's rupee broke a four-day losing streak against the US dollar, appreciating by a marginal two paisas in the inter-bank market on Friday.

As per the State Bank of Pakistan (SBP), the PKR closed at 171.18 against the USD, a day-on-day appreciation of two paisas or 0.01%. On Thursday, the PKR had dropped to the-then record low of 171.20.

Pakistan’s rupee has depreciated over 11% since its recent high in May this year on account of a widening current account deficit, and rising imports. With the demand for dollars increasing due to the surge in prices of international commodities, the currency has remained under pressure in recent months.

Pakistan's rupee falls to 171.2 against US dollar

"The marginal gain on Friday comes as the country's foreign exchange reserves declined by a lower margin than what was being expected," Samiullah Tariq, head of research and development at Pakistan Kuwait Investment Company, told Business Recorder.

Total liquid foreign reserves held by the country stood at $25,969.4 million on October 8, 2021, a marginal 0.12% fall week-on-week, according to data released by the SBP on Thursday.

“Expectations regarding successful negotiations with the International Monetary Fund (IMF) is also playing its part,” said Tariq, adding that being part of the IMF programme brings clarity.

"The IMF nod would provide support to Pakistan’s refinancing needs (as well)."

However, being under a flexible exchange rate regime, the downward trajectory of PKR can only be reversed if outflows are brought under control. “We need to boost our exports, remittances and curtail imports to reverse the trend,” he added.

On the other hand, the SBP has taken a number of measures to curb undesirable foreign currency outflow, especially to Afghanistan, such as imposing restrictions on dollars individuals can carry to Afghanistan, while also mandating exchange companies to conduct biometric verification for all foreign currency sale transactions of $500 and above, and outward remittances.

Law enforcement agencies have also nabbed dozens involved in hoarding and smuggling of dollars, while several measures have been taken to moderate demand/import growth.

Inter-bank market rates for dollar on Friday

BID Rs 171.15
OFFER Rs 171.25

Open-market movement

In the open market, the PKR gained 20 paisas for both buying and selling against USD, closing at 171.50 and 171.80, respectively.

Against Euro, the PKR remained unchanged for both buying and selling, closing at 197.50 and 199, respectively.

Against UAE Dirham, the PKR lost 10 paisas for both buying and selling, closing at 48.10 and 48.30, respectively.

Against Saudi Riyal, the PKR remained unchanged for both buying and selling, closing at 45.50 and 45.70, respectively.

Open-market rates for dollar on Friday

BID Rs 171.50

OFFER Rs 171.80