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Pakistan’s rupee continued to sustain heavy losses against the US dollar in the inter-bank market, closing the session on Monday with another 2.61% fall.

As per the State Bank of Pakistan (SBP), the currency fell Rs7.03 or 2.61% against the US dollar.

On Friday, Pakistan’s rupee had witnessed significant depreciation as well, settling at 262.6 after a fall of Rs7.17 or 2.73%.

Meanwhile, the government moved to pass on the impact of rupee’s drastic fall as Finance Minister Ishaq Dar on Sunday announced a Rs35 increase in the prices of petrol and diesel. The prices of kerosene oil and light diesel oil were also increased by Rs18. The new prices came into effect from Sunday.

Separately, the SBP on Sunday rebutted reports that capping the price of dollar caused loss of $3 billion in remittances and exports.

During the previous week, the rupee depreciated 12.5%, 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.

Monday’s fall takes combined depreciation across just three sessions to over 14%.

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.

Analysts believe the rupee will see stability as the gap among the three simultaneous currency markets narrows amid hope that arrival of the International Monetary Fund (IMF) mission for the ninth review would lead to revival of the bailout programme.

The free-floating exchange rate was among the key prior conditions of the IMF before it looks to complete the ninth review.

Mustafa Pasha, Chief Investment Officer at Lakson Investments, said the rupee is currently undervalued due to a dollar shortage.

“As per the Real Effective Exchange Rate (REER), rupee remains undervalued,” Pasha told Business Recorder.

“The issue is dollar shortage, which is causing this panic.”

Pasha said the sharp depreciation was expected after the authorities allowed the exchange rate to float freely.

“We have to see how much export proceeds are released and if remittance inflows return to the previous level,” said Pasha, adding that if the IMF programme is successfully revived and if inflows from other creditors arrive, the rupee may see stability.

Inter-bank market rates for dollar on Monday

BID Rs 270

OFFER Rs 272

Open-market movement

In the open market, the PKR lost 6 rupees for both buying and selling against USD, closing at 272 and 275, respectively.

Against Euro, the PKR lost 9 rupees for buying and 9.50 rupees for selling, closing at 293 and 296 respectively.

Against UAE Dirham, the PKR lost 2.30 rupees for buying and 2.50 rupees for selling, closing at 74.70 and 75.50, respectively.

Against Saudi Riyal, the PKR lost 2.50 rupees for both buying and selling, closing at 72.80 and 73.50, respectively.

Open-market rates for dollar on Monday

BID Rs 272

OFFER Rs 275

International movement

The dollar firmed on Monday and distanced itself from an eight-month trough ahead of a slew of central bank meetings this week, including the Federal Reserve’s, with traders keenly focused on guidance for the path of interest rate rises.

The US dollar index, which measures the greenback against a basket of currencies, rose 0.03% to 101.92, edging away from last week’s eight-month low of 101.50.

Oil prices, a key indicator of currency parity, climbed in early Asia trade on Monday, supported by tensions in the Middle East following a drone attack in Iran and as Beijing pledged over the weekend to promote a consumption recovery which would support fuel demand.

Comments

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John Jan 30, 2023 01:14pm
First phase of economic warfare is complete!
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Shahid Jan 30, 2023 01:21pm
Political stability is a prerequisite for economic stability! The neutrals ought to swallow their egos and hold elections ASAP! And let not country be neutralized financially!
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Shahid Jan 30, 2023 01:22pm
How masses will make ends meet?
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Mushtaq Jan 30, 2023 01:29pm
@John, And the Generals waited for a war to be fought with weapons! No brain power! Nothing upstairs! Big time mess up!
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Sala Jan 30, 2023 01:31pm
@Mushtaq, And yet no accountability for this mega blunder!
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Yogesh (India) Jan 30, 2023 01:41pm
What is the true value of Pakistani rupee? Can anybody tell?
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Balayjee Jan 30, 2023 02:03pm
@Yogesh (India), Why bother!
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Malik Jan 30, 2023 02:13pm
If PTI is allowed back into power this year the rupee will further depreciate and will go to around 400 to the dollar
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Malik Jan 30, 2023 02:18pm
@Yogesh (India), Convert your dollar amount into pounds st the international rate of exchange . Now convert this into pkr at the open market rate prevalent in Pakistan . This is real rate as pound is not artificially controlled
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Aahad Jan 30, 2023 05:34pm
Ye na thee jamhoor ki kismet keh wasal qanoon o rupiah hota... What a graceful nuclear estate without energy resources..... only the survival of the resillients fit.... this is only an ecological principle ilustrate.
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Omar khokhar Jan 30, 2023 08:07pm
All dars,butts,mir,khawaja and malik mafia is robbing and looting the country These are children of mir jaffer,mir sadik.they are true to their colors. Their children own everything and are citizen of England. What they care.IT IS THE DUMB PEOPLE OF PAKISTAN WHO ARE SLAVISH.NO PROTESTS.
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TimetoMoVVeOn Jan 30, 2023 10:08pm
@Khan, while CPEC was one of the world's most ambitious and amazing opportunity for pakistan, the leaders screwed it up with lack of economic and security policy. Now pakistan will be left with great infrastructure and no investments. Why will Chinese move to pakistan with suicide bombings like this?
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