The Pakistani rupee registered losses against the US dollar for the fourth consecutive session, depreciating 0.26% in the inter-bank market on Monday.
At close, the currency settled at 286.56, a loss of Re0.74 as per the State Bank of Pakistan (SBP).
In the open-market, the US dollar hit a record level of 306 against the rupee. At close, the US dollar settled at Rs305, up by Rs4 as compared to Rs301 on Friday.
During the previous week, the Pakistani rupee depreciated marginally by 0.26% in the inter-bank market, settling at 285.82 against the US dollar on Friday, but its spread with the open market widened considerably as dealers attached a greater premium to the greenback.
An incessant delay in reaching a staff-level agreement with the International Monetary Fund (IMF), uncertainty on the political front, and rising noise over Pakistan’s perceived default risk mean the rupee is likely to remain under pressure. In addition, rising demand ahead of Hajj will also cause pressure on the local currency.
“The ongoing supply shortage of US dollar is driving the spike in rates,” said Zafar Paracha, General Secretary Exchange Companies Association of Pakistan (ECAP), in a video message on Monday.
“Moreover, the customers are not approaching the open-market owing to the current political scenario, which has worsened the situation,” he said.
He shared that banks too are not providing dollars to their customers. “There is a demand for US dollars in the market owing to Hajj season.”
“We expect that US dollar rate would increase further amid continuous delay in the resumption of the International Monetary Fund (IMF) programme,” said Paracha.
In a key development, the government on Saturday clarified that media reports stating the delay in signing the IMF agreement is due to the lender seeking assurances from the Ministry of Finance that the funds will not be used for political purposes are “false and unfounded.”
Separately, Finance Minister Ishaq Dar directed commercial banks to facilitate export-oriented sectors to open Letters of Credit (LCs) for raw material, machinery, spare parts and other items to restore the industry’s supply line without any reference to SBP, well-informed sources told Business Recorder.
Globally, the US dollar nursed losses against the yen and euro on Monday following a surprise breakdown in US debt ceiling negotiations and after Federal Reserve chair Jerome Powell indicated a preference to slow rate hikes.
The dollar index, which measures the US currency against six major peers, edged 0.04% lower to 103.00, after reaching 103.63 last week for the first time since March 20.
Oil prices, a key indicator of currency parity, were steady on Monday as caution relating to US debt ceiling talks dragged on optimism over demand later in the year and offset support from lower supplies from Canada and OPEC+ producers.
Inter-bank market rates for dollar on Monday
BID Rs 286.55
OFFER Rs 286.90
Open-market movement
In the open market, the PKR lost 4 rupees for both buying and selling against USD, closing at 302.00 and 305.00, respectively.
Against Euro, the PKR lost 6 rupees for both buying and selling, closing at 327 and 330 respectively.
Against UAE Dirham, the PKR lost 1.70 rupee for buying and 1.80 rupee for selling, closing at 83.70 and 84.50, respectively.
Against Saudi Riyal, the PKR lost 1.70 rupee for buying and 1.80 rupee for selling, closing at 80.70 and 81.50, respectively.
Open-market rates for dollar on Monday
BID Rs 302.00
OFFER Rs 305.00