Rupee continues winning momentum against US dollar

The Pakistani rupee maintained its upward momentum against the US dollar, appreciating 0.74% in the inter-bank market on Wednesday.

As per the State Bank of Pakistan (SBP), the currency closed at 265.38 against the US dollar, an increase of Rs1.96. The currency has depreciated by 22.8% during the ongoing fiscal year against the greenback.

The gain follows the significant strides the rupee made against the US dollar on Tuesday, settling at 267.34 against the US dollar, an appreciation of Rs2.1 or 0.79%.

In a key development, Fitch Ratings on Tuesday downgraded Pakistan’s long-term foreign-currency issuer default rating (IDR) to ‘CCC-’, from ‘CCC+’ and assigned no outlook because it “typically does not assign outlooks to ratings of ‘CCC+’ or below”.

Fitch said it expected reserves to remain at low levels, though the firm forecasted a modest recovery during the remainder of FY23, due to anticipated inflows and the recent removal of the exchange rate cap.

Globally, the US dollar found some support on Wednesday after stubbornly high US inflation suggested interest rates are going to remain high for longer than investors had expected.

Headline CPI was 0.5% in January mostly due to higher rental and food costs. That was in line with forecasts, though the annual figure of 6.4% was a bit more than expected and traders busily unwound bets on rate falling toward the end of 2023.

The US dollar climbed to a six-week high of 133.30 yen and sat not far below that at 132.73 early in the Asia session. Other currency pairs were a bit more volatile but the greenback, which fell steadily in January, is holding its own.

Oil prices, a key indicator of currency parity, dropped for a second day on Wednesday, as an industry report pointed to ample supplies in the United States and anticipation of further interest rate hikes sparked concerns over weaker fuel demand and the economic outlook.

Inter-bank market rates for dollar on Wednesday

BID Rs 265.35

OFFER Rs 267.35

Open-market movement

In the open market, the PKR gained 2.50 rupees for buying and selling against USD, closing at 265.50 and 268.50, respectively.

Against Euro, the PKR gained 5.50 rupees for buying and selling, closing at 280 and 283 respectively.

Against UAE Dirham, the PKR gained 60 paisa for buying and 70 paisa for selling, closing at 73.70 and 74.30, respectively.

Against Saudi Riyal, the PKR gained 80 paisa for buying and 90 paisa for selling, closing at 70.50 and 71.10, respectively.

Open-market rates for dollar on Wednesday

BID Rs 265.50

OFFER Rs 268.50