Reversal: Pakistan's rupee falls again, closes over 175 against US dollar

The currency's volatile ride continued as after successive gains Pakistan's rupee was back to its losing ways against the US dollar, closing over the 175 level at the inter-bank market on Wednesday.

As per the State Bank of Pakistan (SBP), the PKR finished at 175.04 against the USD after a day-on-day depreciation of 74 paisas or 0.42%. On Tuesday, the rupee had closed at 174.30 against the dollar in the inter-bank market.

The drop comes after the rupee had registered back-to-back gains on Monday and Tuesday, appreciating over 0.5%. The gains came after the currency market got a sense of direction as Pakistan finally reached a staff-level agreement with the International Monetary Fund (IMF).

However, the gains did not last a third session.

Back-to-back gains for Pakistan's rupee against US dollar

“The upward movement of PKR against the USD is due to supply-demand movement in the market, as the exchange rate is market-determined,” Samiullah Tariq, head of research and development at Pakistan Kuwait Investment Company (Private) Limited, told Business Recorder.

Tariq said the IMF announcement did create a positive sentiment in the market, but the economy continues to battle the current account deficit (CAD), suggesting high demand for the dollar.

Pakistan’s current account deficit widened to $1.66 billion in October 2021 from a surplus of $448 million recorded in the same month last year. On a monthly basis, CAD widened 46% as compared to $1.13 billion recorded in the previous month (September 2021).

Tariq added that the CAD for the upcoming month is expected to be lower, amid import-curtailing measures taken by the authorities, which would ease pressure on the rupee.

“Furthermore, export figures are expected to improve on the back of an increase in cotton price. Measures taken by the government will take some time to reflect."

Inter-bank market rates for dollar on Wednesday

BID Rs 175

OFFER Rs 175.20

Open-market movement

In the open market, the PKR lost 75 paisas for buying and 50 paisas for selling against USD, closing at 176.75 and 177.50, respectively. This broke the spread of one rupee between buying and selling that had been maintained for some time.

Against Euro, the PKR gained 50 paisas for both buying and selling, closing at 196.50 and 198, respectively.

Against UAE Dirham, the PKR gained 20 paisas for both buying and selling, closing at 49.50 and 50, respectively.

Against Saudi Riyal, the PKR remained unchanged for buying while losing 30 paisas for selling, closing at 46.40 and 47, respectively.

Open-market rates for dollar on Wednesday

BID Rs 176.75

OFFER Rs 177.50