Pakistani Rupee Plummets for 2nd Consecutive Day Against Major Currencies

 

In a concerning development for Pakistan's economy, the Pakistani rupee has witnessed a significant decline for the second consecutive day against key global currencies, including the US Dollar, British Pound, and Euro. The rupee's downward trajectory is causing worry among market players and comes despite recent financing injections from international sources.

The Pakistani rupee has experienced a substantial downturn in value against major currencies during its second consecutive day of decline. Opening the day's trade at 277.5 in the interbank market, the rupee struggled to maintain stability throughout the day.

Initially showing promise, the rupee rose as high as 272 against the US Dollar, gaining approximately Rs. 5.

However, it soon retraced back to the 277 level between 12:30 PM and 1:15 PM before plummeting below 279. Open market rates reflected this decline, ranging from 287 to 292 across multiple currency counters.

By the close of trading, the Pakistani rupee had depreciated by 0.60 percent, settling at 279.26 after losing Rs. 1.67 against the US Dollar. The informal exchange rate followed a similar pattern, initially rising to 286 before sliding to 295.

This drop in value comes as a surprise, given the recent news that Pakistan had secured an additional $5.6 billion in financing. The International Monetary Fund (IMF) provided a $1.2 billion deposit, while bilateral partners such as Saudi Arabia and the United Arab Emirates committed $3.7 billion, with $3 billion already disbursed.

Despite these injections of funds, the rupee's depreciation continues to persist, echoing last week's volatility driven by cashflows from the UAE, KSA, and IMF. The recent IMF tranche, coupled with previous disbursements from the UAE and Saudi Arabia totaling $3 billion, was expected to bolster Pakistan's foreign exchange reserves, exceeding $8.5 billion.

Market analysts are attributing the rupee's decline to the prevailing uncertainty, highlighting how unpredictable factors can impact the exchange rate despite inflows. The impact of interest rates and a weaker rupee on inflation is likely to contribute to further exchange rate fluctuations. Some experts forecast the rupee to climb above 285 and potentially reach as high as 300 until upcoming elections.

The rupee's depreciation has been significant, with a decrease of nearly Rs. 54 since January 2023 and a staggering decline of over Rs. 103 against the US Dollar since April 2022.

Furthermore, in today's interbank currency market, the rupee has experienced losses of 44 paisas against the Saudi Riyal (SAR), 45 paisas against the UAE Dirham (AED), Rs. 1.48 against the Pound Sterling (GBP), and Rs. 2.18 against the Euro (EUR). On a positive note, the rupee gained 51 paisas against the Canadian Dollar (CAD) and 66 paisas against the Australian Dollar (AUD).

The continued devaluation of the Pakistani rupee against major currencies poses significant challenges for the country's economy. As market players closely monitor the situation, the government and financial authorities may need to implement strategies to stabilize the exchange rate and restore investor confidence.

1: Pakistani Rupee's Open Market Rates (Range): 287-292

2: Pakistani Rupee's Closing Rate against the US Dollar: 279.26

3: Pakistani Rupee's Depreciation against the US Dollar: 0.60% or Rs. 1.67

4: Informal Exchange Rate (Range): 286-295

5: Cash Rate per Dollar in Hundi (Range): 288-298

6: Other Exchange Rate Movements:

• Saudi Riyal (SAR) loss: 44 paisas
• UAE Dirham (AED) loss: 45 paisas
• Pound Sterling (GBP) loss: Rs. 1.48
• Euro (EUR) loss: Rs. 2.18
• Canadian Dollar (CAD) gain: 51 paisas
• Australian Dollar (AUD) gain: 66 paisas

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