Rupee sustains losses, settles at 268.83 against US dollar

A day after recording some improvement, the Pakistani rupee was under pressure again, settling with a loss of 0.35% against the US dollar on Wednesday.

As per the State Bank of Pakistan (SBP), the currency closed at Rs268.83, a depreciation of Rs0.94 against the US dollar. The currency has depreciated by 23.80% during the ongoing fiscal year against the greenback.

On Tuesday, Pakistan’s rupee saw some improvement, its first after 29 sessions, as it had settled at 267.89 after a gain of Rs1.74 or 0.65%.

However, ratings agency Fitch Solutions has said Pakistani rupee is expected to weaken further, particularly with the country’s balance of payments position that is likely to remain weak for several more months.

The ratings agency noted that a continued weakening in the rupee will have broader economic implications. In the near term, it could exacerbate imported inflationary pressure and may eventually result in steeper policy rate hikes from the SBP.

Meanwhile, in a key development, the International Monetary Fund (IMF) on Tuesday asked Pakistan to withdraw untargeted subsidies and reduce circular debt, as well as meet petroleum levy and Federal Board of Revenue (FBR) tax collection targets.

The Fund’s mission is currently in Pakistan for technical and policy-level discussions to revive the $7 billion Extended Fund Facility (EFF).

Globally, the dollar was broadly flat against major currencies on Wednesday after easing in the previous session following US data that showed moderating wage pressure, with investors keenly awaiting the conclusion of a Federal Reserve policy meeting.

The US central bank is expected to raise interest rates by 25 basis points later on Wednesday, but Fed Chair Jerome Powell’s press conference is likely to take the spotlight as traders attempt to gauge how long the Fed is likely to stay hawkish.

The dollar index, which measures the US currency against six major peers, fell 0.029% to 102.060.

Oil prices, a key indicator of currency parity, rose on Wednesday as signs of slowing inflation in the United States eased fears that the world’s largest oil user may face a recession because of further interest rate hikes and a weaker dollar-supported some buying interest.

Inter-bank market rates for dollar on Wednesday

BID Rs 268.85

OFFER Rs 270.85

Open-market movement

In the open market, the PKR gained 1.50 rupees for both buying and selling against USD, closing at 272 and 275, respectively.

Against Euro, the PKR gained 50 paisas for both buying and selling, closing at 292.50 and 295 respectively.

Against UAE Dirham, the PKR gained 50 paisas for both buying and selling, closing at 74 and 74.70, respectively.

Against Saudi Riyal, the PKR gained 1.30 rupees for buying and 1.50 rupees for selling, closing at 71.50 and 72, respectively.

Open-market rates for dollar on Wednesday

BID Rs 272

OFFER Rs 275