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Markets

12th successive gain: Rupee settles under 218 against US dollar

  • Cumulatively, rupee has appreciated Rs21.73 or 10% against the US dollar in the past twelve sessions
Published October 10, 2022
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Pakistan’s rupee maintained its upward trajectory against the US dollar for the 12th successive session, and appreciated nearly 0.9% in the inter-bank market on Monday.

As per the State Bank of Pakistan (SBP), the rupee closed at 217.97 after appreciating Rs1.95 or 0.89%. In the last twelve trading sessions, the rupee has cumulatively appreciated Rs21.73 or 10%.

On Friday, the rupee’s winning streak against the US dollar entered the 11th session, as the rupee closed at 219.92 after appreciating Rs2.02 or 0.92%.

In the previous week, the rupee appreciated by Rs8.53 or 3.88% against the US dollar.

The recent appreciation of rupee is being attributed to actions taken by the State Bank of Pakistan (SBP) and other authorities to curb speculation in the market.

In an important announcement, Finance Minister Ishaq Dar on Sunday said that Pakistan will not seek debt restructuring from Paris Club creditor nations, as he sought to restore market confidence after a credit rating downgrade.

The new rating from Moody’s raised concerns that Pakistan could default on its foreign debt as contends with economic turmoil and a balance of payments crisis.

“We have decided not to go to Paris Club,” Dar said, adding that in consultation with Prime Minister Shehbaz Sharif it was decided that it wasn’t in the nation’s interest to ask for a restructuring.

On complaints received from business community pertaining to Letter of Credit (LCs), Dar informed that the State Bank had compiled the data and as a first step it was decided that all the pending payments worth upto $50,000 would be cleared, adding that about 7,952 payments would be made, which would help to clear about 52% pending LCs.

Saad Khan, Head of Research at IGI Securities told Business Recorder that there are no fundamental developments driving the rupee appreciation.

“The appreciation in currency comes after a majority of persons submitted dollars to the market amid Ishaq Dar’s statements,” he said.

“However, this would be a very short-term play and after a while, the market forces would kick in,” he added.

Meanwhile, the US dollar remains strong against other currencies, as US Fed continues to hike the policy rate. Moreover, after OPEC’s decision to cut oil production, oil prices are expected to increase in the coming weeks in the coming winter months, as demand for energy needs surges, said Khan.

“If commodity prices increase, this would hit the country,” he added.

Internationally, the dollar started the week firmly on Monday, with a strong U.S. labour market reinforcing bets on higher interest rates as traders braced for data expected to show stubbornly high inflation.

The US dollar index was steady at 112.83, off lows around 110 last week and creeping back toward last month’s 20-year high of 114.78.

Oil prices, a key determinant of currency parity, fell on Monday, ending five straight days of gains, as investors looked to slowing economic activity in China, the world’s biggest crude importer, which revived concerns about a global recession and falling global fuel demand.

Inter-bank market rates for dollar on Monday

BID Rs 218

OFFER Rs 219

Open-market movement

In the open market, the PKR gained 2 rupees for both buying and selling against USD, closing at 218 and 220, respectively.

Against Euro, the PKR gained 5 rupees for both buying and selling, closing at 214 and 216 respectively.

Against UAE Dirham, the PKR gained one rupee for both buying and selling, closing at 60 and 60.50, respectively.

Against Saudi Riyal, the PKR gained 50 paisas for both buying and selling, closing at 58 and 58.50, respectively.

Open-market rates for dollar on Monday

BID Rs 218

OFFER Rs 220

Comments

Comments are closed.

Fazeel Siddiqui Oct 10, 2022 02:02pm
Are you pushing Overseas Pakistanis towards Hawala & Hundi? SBP converts remittances and commercial banks convert expensive RDA transfers at 215 forced predatory exchange rate defying Pakistan's economic, financial and market health which suggest 275+. I never found Malik Bostan sayings or reasoning come true, who made him FAP chairman? Seems now he speaks as Dar's spokesperson.
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