New low: rupee closes at 262.6 against US dollar after 2.7% fall in inter-bank market
- This is the currency's 28th successive loss in the inter-bank market
- Depreciation in just two sessions crosses 12%
After its historic fall the previous day, Pakistan’s rupee continued to witness significant depreciation against the US dollar in the inter-bank market, falling 2.73% on Friday.
As per the State Bank of Pakistan (SBP), the rupee closed at 262.6 after a fall of Rs7.17 or 2.73%.
This takes combined depreciation in two sessions (Thursday and Friday) to 12.1%.
The rupee had earlier hit a level of 264 in intra-day trading.
The depreciation comes as Pakistan moves to convince the International Monetary Fund (IMF) that it has a ‘free floating’ exchange rate, ahead of the lender’s visit at the end of this month, which was also announced on Thursday.
Many analysts said the rupee was bound to see significant depreciation as part of the prior conditions to revive the IMF bailout programme.
On Thursday, Pakistan’s rupee witnessed historic depreciation against the US dollar, settling with a loss of 9.6% in a single session.
The IMF also announced its mission will visit Pakistan from January 31-February 9 to continue the discussions for the 9th review under the Extended Fund Facility (EFF).
This was confirmed by IMF Resident Representative Esther Perez Ruiz to Business Recorder on Thursday.
“At the request of the authorities, an in-person Fund mission is scheduled to visit Islamabad January 31st – February 9th to continue the discussions under the ninth EFF review,” she stated.
The IMF programme revival has been deemed crucial in the face of fast-depleting foreign exchange reserves held by the SBP that dropped a massive $923 million to a mere $3.7 billion, data released on Thursday showed. This is the lowest level of SBP-held reserves since February 2014.
Inter-bank market rates for dollar on Friday
BID Rs 263
OFFER Rs 265
In the open market, the PKR lost 6 rupees for buying and 7 rupees for selling against USD, closing at 266 and 269, respectively.
Against Euro, the PKR lost 7.50 rupees for both buying and selling, closing at 284 and 286.50 respectively.
Against UAE Dirham, the PKR lost 90 paisas for buying and one rupee for selling, closing at 72.40 and 73, respectively.
Against Saudi Riyal, the PKR lost 80 paisas for buying and 90 paisas for selling, closing at 70.30 and 71, respectively.
Open-market rates for dollar on Friday
BID Rs 266
OFFER Rs 269
Globally, the US dollar dropped against the yen on Friday as traders bet a hawkish pivot from the Bank of Japan (BOJ) was still in the offing.
The dollar also sagged close to a nine-month low versus the euro, amid market expectations the European Central Bank next week will implement a rate hike twice as big as the Federal Reserve’s.
The dollar index - which measures the currency against six major peers, including the euro, yen and British pound - edged 0.04% lower to 101.70, putting it on course for a 0.28% decline this week.
Oil prices, a key indicator of currency parity, edged ahead for a second session on Friday, buoyed by stronger-than-expected US economic growth and hopes of a rapid recovery in Chinese demand as COVID-19 cases and deaths plunged from last month’s peak levels.