Rupee reverses losing trajectory, gains 2.38% against US dollar

Volatility continued in the currency market as the Pakistani rupee registered a significant gain of 2.38% against the US dollar on Friday, a day after plummeting 6.7%.

As per the State Bank of Pakistan (SBP), the rupee settled at 278.46 against the greenback, an increase of Rs6.63 in the inter-bank market.

The recovery comes after the Pakistani rupee plummeted nearly Rs19 to settle at a new historic low of 285.09 against the US dollar on Thursday.

Saad Khan, Head of Research at IGI Securities, told Business Recorder that the reversal of the rupee trajectory comes after Pakistan’s foreign exchange reserve position improved following receipt of funds from China.

“This positive sentiment comes after funds from China Development Bank were received, which were reflected in the foreign exchange reserve position yesterday, bringing a sense of calmness into the market,” said Khan.

“However, the daily wild swings of exchange rate are very unusual and a dangerous trend, which will boost the black market premium,” he added.

In a key development, the State Bank of Pakistan’s Monetary Policy Committee (MPC) on Thursday increased the key policy rate by 300 basis points (bps) to 20% with a view to taming inflation.

The committee also stressed on the urgent need for energy conservation measures to reduce pressure on the external account and meet import requirements.

The MPC believed that this decision will help to anchor inflation expectations and steer it to a medium-term target of 5%-7% by end-FY25.

Globally, the US dollar eased from a 2-1/2-month high versus the yen on Friday and looked set for its first weekly loss since January against major peers as traders tried to gauge the path for Federal Reserve policy.

The yen, though, which is particularly sensitive to US-Japanese long-term interest rate differentials, threatened to extend its recent losing streak to seven weeks, even as it gained strength on Friday with 10-year US yields retreating from a nearly four-month high close to 4.1%.

The dollar index, which measures the currency against the yen, euro and four other major peers, eased 0.24% to 104.71, from as high as 105.36 at the start of the week, which was its strongest level since Jan. 6. Since last Friday, the index has slipped 0.5%.

Oil prices, a key indicator of currency parity, held steady on Friday, poised to register a weekly gain as renewed optimism on China’s demand recovery overrode recession worries over growing US crude inventories and tightening monetary policy in Europe.

Inter-bank market rates for dollar on Friday

BID Rs 278.50

OFFER Rs 281.50

Open-market movement

In the open market, the PKR gained 5.50 rupees for buying and selling against USD, closing at 279.50 and 282.50, respectively.

Against Euro, the PKR gained 7 rupees for buying and selling, closing at 290.00 and 293.00 respectively.

Against UAE Dirham, the PKR gained 1.50 rupee for buying and selling, closing at 76.50 and 77.20, respectively.

Against Saudi Riyal, the PKR gained 1.30 rupee for buying and 1.20 rupee for selling, closing at 74.20 and 75.00, respectively.

Open-market rates for dollar on Friday

BID Rs 279.50

OFFER Rs 282.50