KARACHI: The rupee depreciated 12.5% during the previous week, but the bulk of the fall came in the last two sessions – on Thursday and Friday – as the currency was finally let off the hook against the US dollar in the inter-bank market.
The rupee, which plunged 9.6% on Thursday for its worst fall in percentage terms since 1998, closed the week at 262.6 after starting out at 229.67 against the US dollar.
It depreciated 2.73% on Friday, which was also its 28th successive fall, but the earlier ones paled in comparison. The drastic decrease came as authorities let the exchange rate float freely after apparently keeping it under check through administrative measures for several weeks, a move that widened the gap between the open- and black-markets of foreign currency.
However, as Pakistan desperately looked to revive its bailout programme with the International Monetary Fund (IMF), letting the exchange rate float freely in official markets was seen as a key prerequisite ahead of the ninth review.
On Thursday, the IMF said that its mission will visit Islamabad at the end of this month to continue discussions under the ninth Extended Fund Facility (EFF) review. The announcement came just hours after the rupee recorded its historic depreciation in the inter-bank market.
The IMF highlighted that the mission will focus on policies to restore domestic and external sustainability; restore the viability of the power sector and reverse the continued accumulation of circular debt; and re-establish the proper functioning of the foreign exchange market, allowing the exchange rate to clear the FX shortage.
The desperation in reviving the IMF programme comes as Pakistan failed to secure additional inflows from ‘friendly countries’ to the extent Islamabad had hoped, and instead, saw its foreign exchange reserves deplete to under one month of import cover. On Thursday, the State Bank of Pakistan (SBP) reported its reserves’ level at $3.7 billion, the lowest since since February 2014.
Analysts believe the rupee will see stability in days to come as the gap among the three simultaneous currency markets narrows amid hope that arrival of the IMF mission for the ninth review would lead to revival of the programme.
Open-market rates
In the open market, the PKR lost 28.25 rupees for buying and 29 rupees for selling against USD, closing at 266 and 269, respectively.
Against Euro, the PKR lost 14.50 rupees for both buying and selling, closing at 284 and 286.50, respectively.
Against UAE Dirham, the PKR lost 3.40 rupees for both buying and selling, closing at 72.40 and 73, respectively.
Against Saudi Riyal, the PKR lost 3.80 rupees for buying and 4 rupees for selling, closing at 70.30 and 71, respectively.
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THE RUPEE
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Weekly inter-bank market rates for dollar
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Bid Close Rs. 263.00
Offer Close Rs. 265.00
Bid Open Rs. 229.65
Offer Open Rs. 230.65
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Weekly open-market rates for dollar
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Bid Close Rs. 266.00
Offer Close Rs. 269.00
Bid Open Rs. 237.75
Offer Open Rs. 240.00
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Copyright Business Recorder, 2023
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