Rupee approaches all-time low again, closes at 239.65 against US dollar

The rupee's woeful fall continued as it neared its all-time low against the US dollar, depreciating for the 14th successive session to settle at 239.65 on Wednesday, driven by expectations of a rising import bill and a strong USD on the international front.

As per the State Bank of Pakistan (SBP), the rupee closed at 239.65 after declining by Re0.74 or 0.31%.

In less than two months, the rupee has undergone a complete u-turn, approaching its all-time low against the US dollar in the inter-bank market after a 14th successive fall took cumulative depreciation to 8.8%.

The rupee's lowest closing in the inter-bank market still stands at 239.94 against the US dollar on July 28, 2022.

On Tuesday, Pakistan's rupee had depreciated for the 13th successive session to settle with a loss of 0.42% at 238.91 against the US dollar.

The currency has been under renewed pressure despite release of the International Monetary Fund (IMF) tranche of $1.16 billion earlier this month.

The downward push comes on the back of a rising dollar value in the global markets and expectations of a widening current account deficit amid an increase in imports, especially edible items, due to floods.

On the other hand, experts predicted that inflows from exports will remain lacklustre, while remittances are also expected to disappoint.

“I don’t think we should expect any stability in the currency parity in light of recent developments,” Wajid Rizvi, Head of Research at Intermarket Securities Limited, told Business Recorder.

Internationally, the dollar jumped to a new two-decade high on Wednesday, as Russian President Vladimir Putin announcing a "partial mobilisation" in a major escalation of the war in Ukraine rattled markets ahead of another likely aggressive rate hike from the US Federal Reserve.

The Fed was also due to announce its latest policy decision later on Wednesday. Money markets were fully pricing in a 75 basis point rate hike, with the chance of a larger full-point rate hike fading to just 16%, according to CME's FedWatch tool.

“If Fed rates are hiked further, this would strengthen the dollar,” said Rizvi.

“Moreover, the PKR has to come down against USD, in order for the country’s exports to remain competitive in the international market,” he said.

The US dollar index, which measures the greenback against a basket of currencies, was more than 0.5% higher to 110.87 - its highest level since 2002.

Oil prices, a key indicator of currency parity, jumped more than 2% on Wednesday after Putin's announcement, which has raised concerns about tighter oil and gas supply.

Inter-bank market rates for dollar on Wednesday

BID Rs 239.75

OFFER Rs 240.75

Open-market movement

In the open market, the PKR remained unchanged for both buying and selling against USD, closing at 243 and 245.40, respectively.

Against Euro, the PKR gained 2 rupees for both buying and selling, closing at 240.50 and 242.90 respectively.

Against UAE Dirham, the PKR remained unchanged for both buying and selling, closing at 66.15 and 66.80, respectively.

Against Saudi Riyal, the PKR remained unchanged for both buying and selling, closing at 64.50 and 65.15, respectively.

Open-market rates for dollar on Wednesday

BID Rs 243

OFFER Rs 245.40