- Currency weakens to 175.27 in inter-bank market
Pakistan's rupee dropped to another all-time low against the US dollar, closing above the 175 level for the first time in the inter-bank market on Tuesday.
As per the State Bank of Pakistan (SBP), the PKR closed at 175.27 against the USD, a day-on-day depreciation of 84 paisas or 0.48%. On Monday, the PKR had dropped to the-then record low of 174.43.
The PKR has lost around 13% of its value against the greenback since its recent high in May amid various explanations being provided by the central bank as well as market followers.
Among them remains lack of clarity over negotiations with the International Monetary Fund (IMF) that has kept the market unnerved.
"The market is eagerly waiting for a green signal from the international lender," Saad Khan, Head of Equities at IGI Securities, told Business Recorder.
Negotiations with the IMF have been ongoing for a while. Pakistan is seeking a $1-billion tranche under the Extended Fund Facility (EFF).
Khan said that the IMF has urged the government to introduce monetary and fiscal tightening, as it sees issues on the external balance side and wants the government to curb unnecessary imports.
“However, fiscal tightening would lead to further increase in domestic inflation,” said Khan.
Earlier, Business Recorder reported that an IMF condition for the successful conclusion of the ongoing sixth review talks with Pakistan authorities is the rollover of debt from friendly countries, including $1 billion from Saudi Arabia.
The report said that the presence of Advisor to Prime Minister on Finance and Revenue Shaukat Tarin in Riyadh may be seen in the context of securing the rollover of the $1-billion debt and exploring the possibility of oil on deferred payment which would reduce pressure on the balance of payment position.
On the development, Khan said that if Pakistan is successful in grabbing the deferred payment, it would provide much-needed stability to PKR.
The analyst added that the increase in commodity prices in the international markets has also disturbed business sentiment as it has hiked the cost of doing business. “If the price hike reverses, it would positively impact the PKR,” he said.
“Furthermore, shipping and freight rates are at an all-time high, owing to accumulated demand, blockage of major shipping channels such as Panama and Egypt, leading to massive growth in these rates."
Inter-bank market rates for dollar on Tuesday
BID Rs 175.25
OFFER Rs 175.35
In the open market, the PKR lost 80 paisas for buying and 90 rupees for selling against USD, closing at 175.60 and 176.40, respectively.
Against Euro, the PKR remained unchanged for both buying and selling, closing at 201.70 and 203.50, respectively.
Against UAE Dirham, the PKR lost 20 paisas for buying and 15 paisas for selling, closing at 49.60 and 50, respectively.
Against Saudi Riyal, the PKR lost 35 paisas for both buying and selling, closing at 46.20 and 46.65, respectively.
Open-market rates for dollar on Tuesday
BID Rs 175.60
OFFER Rs 176.40