Rupee's woeful ride continues, depreciates to settle at 231.92 against US dollar

Pakistan's rupee continued to sustain losses against the US dollar for the eighth successive session, settling with a depreciation of 0.91% in the inter-bank on Tuesday, as investors remained concerned over the trade gap in coming months.

As per the State Bank of Pakistan (SBP), the rupee closed at 231.92 after declining by Rs2.1. During the last eight trading sessions, the rupee has cumulatively declined by Rs13.32 or 5.7% against the US dollar.

On Monday, the rupee had closed lower against the US dollar for the seventh successive session, settling with a depreciation of 0.71% at 229.82 in the inter-bank market as a shortage of greenback kept the local currency under pressure.

“After floods, the demand for dollar has risen, as trade numbers are expected to be higher in the next few months,” Saad Khan, Head of Research at IGI Securities, told Business Recorder.

Khan said the country’s exports are also expected to take a hit after floods devastated cotton and rice crops.

“There is pressure on food-related item imports, and would nullify the impact of oil price decline. This is being reflected in the market,” he said.

The market analyst was of the view that the situation might improve after September amid dollar inflows, which will reduce the financing gap.

“However, the rupee would remain under pressure in coming weeks, and if the trade gap widens, then things might get uglier."

Meanwhile, another analyst, on condition of anonymity, said the demand for US dollar has risen as there is a considerable outflow to Afghanistan.

On Monday night, Federal Minister for Finance Miftah Ismail said that the government will introduce a string of policy measures in the coming days, which would stabilise the currency market, but refrained from giving specifics.

Globally, the dollar nursed losses on Tuesday ahead of U.S. inflation data that could show some signs of softening, while the euro found its footing above parity on hawkish comments from policymakers that rates would need to increase further.

The dollar index stood firm at 108.2, after falling 0.7% overnight, the largest daily decline since August.

Meanwhile, oil prices, a key determinant of currency parity, rose in volatile trade on Tuesday as worries about tight fuel supplies ahead of winter offset investor concerns about lower demand in China, the world’s biggest crude importer, and further increases in US and European interest rates.

Inter-bank market rates for dollar on Tuesday

BID Rs 232

OFFER Rs 233

Open-market movement

In the open market, the PKR lost 2 rupees for both buying and selling against USD, closing at 236 and 238, respectively.

Against Euro, the PKR lost one rupee for both buying and selling, closing at 241 and 243 respectively.

Against UAE Dirham, the PKR lost one rupee for buying and 90 paisas for selling, closing at 66.50 and 67, respectively.

Against Saudi Riyal, the PKR lost 20 paisas for both buying and selling, closing at 63.70 and 64.20, respectively.

Open-market rates for dollar on Tuesday

BID Rs 236

OFFER Rs 238