- Closes at 171.63 in inter-bank market on Tuesday
Pakistan's rupee weakened sharply on Tuesday, depreciating another 0.65% in the inter-bank market as lack of clarity on the International Monetary Fund (IMF) announcement caused some level of panic among participants.
As per the State Bank of Pakistan (SBP), the PKR settled at 171.63 against the USD after a day-on-day depreciation of Rs1.12 or 0.65%. On Monday, the PKR had dropped to 170.51 against the USD.
On Wednesday last week, the rupee had closed below the 170 level for the first time in over a month in the inter-bank market after a 3.1% gain on the back of Saudi Arabia's support package. The gain came after the rupee had earlier dropped to its lowest level, closing over the 175 level for the first time on October 26.
However, this week, the pressure seemed to have returned.
“The market is waiting for the IMF green signal regarding resumption of the Extended Fund Facility (EFF),” Malik Bostan, President Pakistan Forex Dealers Association, told Business Recorder.
Bostan added that pressure would remain on the currency until the IMF negotiations are complete. He added that recent statements by Advisor to Prime Minister on Finance and Revenue Shaukat Tarin regarding inflation have also irked the market.
Last week, Tarin said that agreement with the IMF, under which $1-billion will be released by the international lender, will be announced in a day or two. However, the announcement has yet to be made.
The programme is seen by many as an important one for Pakistan under which it gets access to foreign currency reserves.
Sana Tawfik, an equities analyst at Arif Habib Limited (AHL), also raised similar concerns.
"Investors are asking what is taking so long to conclude the negotiations with the IMF,” Tawfik told Business Recorder, adding that the upcoming remittance figure for the month of October would also cause pressure “if the amount declines on a monthly basis".
Meanwhile, Bostan said that inflationary pressure is on the rise amid hike in power tariff and energy prices, and this could further lead to rupee depreciation.
"It is vital to increase exports, and bring the trade gap down in order to arrest the downward slide."
Inter-bank market rates for dollar on Tuesday
BID Rs 171.63
OFFER Rs 171.73
In the open market, the PKR lost 1.80 rupees for both buying and selling against USD, closing at 173.80 and 174.80, respectively.
Against Euro, the PKR lost 45 paisas for buying and 40 rupees for selling, closing at 198.50 and 200.40, respectively.
Against UAE Dirham, the PKR lost 10 paisas for buying and 5 paisas for selling, closing at 47.70 and 48.15, respectively.
Against Saudi Riyal, the PKR lost 20 paisas for both buying and selling, closing at 45.70 and 46.15, respectively.
Open-market rates for dollar on Tuesday
BID Rs 173.80
OFFER Rs 174.80