KARACHI: The rupee had a woeful previous week, losing value in all five sessions for a cumulative fall of over 4% to close at 228.18 against the US dollar in the inter-bank market.
Its fall was mainly attributed to expectations that Pakistan’s import bill would increase in the wake of devastating floods that have destroyed a huge portion of crops, as well as the dollar’s global strength. However, many analysts also believe that there are other reasons at play, including speculation and demand for foreign currency in the open market.
Cumulatively, these factors have affected rupee’s movement, with the open market feeling the pressure earlier than the inter-bank market. This week, spread between the inter-bank and open market narrowed to less than Rs6, which a week ago had widened to Rs8-10.
While the State Bank of Pakistan (SBP) reported an increase in its foreign exchange reserves on Thursday, the level is still at less than two months of import cover. Finance Minister Miftah Ismail also unequivocally stated that letters of credit for “pure” importers would continue to be hard to come by, but also stressed that cotton would be imported.
Rising expectation that Pakistan’s import bill would surge even as aid trickles in will likely keep the rupee under pressure.
Open-market rates
In the open market, the PKR lost9.50 rupees for both buying and selling against USD, closing at 232.50 and 234.50, respectively.
Against Euro, the PKR lost 12 rupees for both buying and selling, closing at 232 and 234, respectively.
Against UAE Dirham, the PKR lost 2.50 rupees for buying and 2.60 rupees for selling, closing at 63.50 and 64.10, respectively.
Against Saudi Riyal, the PKR lost 2.50 rupees for both buying and selling closing, at 61.50 and 62, respectively.
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THE RUPEE
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Weekly Interbank market rates for dollar
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Bid Close Rs. 228.50
Offer Close Rs. 229.50
Bid Open Rs. 219.00
Offer Open Rs. 220.00
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Weekly Open market rates for dollar
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Bid Close Rs. 232.50
Offer Close Rs. 234.50
Bid Open Rs. 223.00
Offer Open Rs. 225.00
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Copyright Business Recorder, 2022
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