New historic low: Rupee plummets further, closes at 236.02 against US dollar

Persistent political and economic uncertainty continued to add pressure on Pakistan's rupee, as the local currency closed at yet another record low against the US dollar in the inter-bank market on Wednesday.

As per the State Bank of Pakistan (SBP), the rupee closed at 236.02, a day-on-day fall of Rs3.09 or 1.31%, against the greenback.

The latest depreciation takes total loss to over 11% for the rupee in the last nine trading sessions. The fall comes despite statements by Moody's and Fitch Ratings that said they expected Pakistan to receive $1.2 billion from the International Monetary Fund (IMF).

On Tuesday, the rupee had closed at 232.93, a day-on-day fall of Rs3.05 or 1.31%, against the greenback.

Later that day, the Supreme Court declared Chaudhry Pervaiz Elahi as duly-elected Chief Minister of Punjab in consequence of the runoff election held on July 22, 2022 with the Pakistan Muslim League-Nawaz (PML-N) saying it would now chalk out a future strategy in consultation with the allies.

Louder political noise has irked market sentiment with many analysts of the view that economic reforms agreed recently with the IMF would be put on the backburner.

In a note, Trust Securities and Brokerage Limited said that the apex court judgment has changed the political setup in Punjab and “is likely to shed relative uncertainty and bring relative political clarity, though doesn’t fix the political crisis”.

On the other hand, “delays in the IMF programme and default concerns continue to deteriorate foreign exchange markets and PKR versus USD".

Additionally, most other currencies in Asia too were broadly weaker as investors remained on edge ahead of a highly-anticipated US Federal Reserve's policy meeting that could determine the path of policy tightening for the region’s central banks.

Talking to Business Recorder, Abdullah Umer, an analyst at Ismail Iqbal Securities, said the ongoing depreciation is due to multiple factors.

“There is a shortage of liquidity in the market, amid a post-Eid decline in remittance inflows,” said Umer. “Furthermore, the ongoing political situation has led the exporters to hold their proceeds, therefore, a large amount remains unrealised.”

Umer said post-Eid import Letters of Credit (LCs) also piled up. "All of these factors have created pressure on the local currency,” he said. The analyst expects pressure to ease in the coming months amid revival of the IMF programme, and decline in import payments.

Inter-bank market rates for dollar on Wednesday

BID Rs 237

OFFER Rs 239

Open-market movement

In the open market, the PKR lost 4 rupees for both buying and selling against USD, closing at 239 and 241, respectively.

Against Euro, the PKR lost 5 rupees for both buying and selling, closing at 240 and 242 respectively.

Against UAE Dirham, the PKR lost 2 rupees for both buying and selling, closing at 64.50 and 65, respectively.

Against Saudi Riyal, the PKR lost one rupee for both buying and selling, closing at 62.50 and 63, respectively.

Open-market rates for dollar on Wednesday

BID Rs 239

OFFER Rs 241