Dramatic U-turn: rupee stages comeback, settles at 285.08 against US dollar

After hitting a record low a day earlier, the Pakistani rupee witnessed a spectacular comeback against the US dollar, registering a massive gain of nearly Rs14 in the inter-bank market on Friday.

At close, the rupee finished with an increase of Rs13.85 or 4.85% to settle at 285.08 against the US dollar.

The massive appreciation comes after the rupee finished at a record low of 298.93 against the US dollar in the inter-bank market on Thursday.

As the dust settled a bit on the political front after the Supreme Court declared Imran Khan’s arrest illegal, and violent protests ended, investors took some positive cues from the development.

Additionally, Finance Minister Ishaq Dar again moved to pacify markets that Pakistan, with or without the International Monetary Fund (IMF), will not default and shall fulfill external obligations in a timely manner.

Taking to the media on Thursday, Dar said that there is a plan for foreign payments of $3.7 billion in May and June. He added that China is expected to roll over another $2.4 billion.

He also said the budget would be presented on June 9, 2023.

“The rebound comes on the back of lower political temperature,” said Saad Khan, Head of Research at IGI Securities, told Business Recorder.

The market expert said political uncertainty caused the depreciation. “What we were seeing for the past two days was random depreciation, which is being corrected,” he added.

Political volatility rose in Pakistan amid deadly unrest sparked by Pakistan Tehreek-e-Insaaf (PTI) chief Imran Khan’s arrest on Tuesday that aggravated instability at a time of severe economic crisis and a delay in the IMF bailout.

“This is the highest ever day-to-day appreciation recorded on absolute terms,” Tahir Abbas, Head of Research at Arif Habib Limited (AHL), told Business Recorder.

The expert said that high demand for US dollars and political tension drove the rupee towards a record low.

“Yesterday (Thursday), Letters of Credit on account of oil payments were retired, which led to an increased demand for the US dollar. This was not the case today, thus the currency rebounded,” he added.

Internationally, the US dollar was clinging close to a more than one week peak on Friday as a slew of data overnight pointed to a slowing US economy, with investors betting that the Federal Reserve will further pause its interest rate increases.

The dollar index, which measures the US currency against six rivals, eased 0.059% to 102.02, not far from the 102.15 it touched overnight, the highest since May 2.

The index is set to snap a two-week losing streak, gaining 0.7% this week.

Oil prices, a key indicator of currency parity, slipped on Friday, heading for a fourth weekly decline, as renewed economic concerns in the United States and China revived concern about fuel demand growth in the world’s two largest oil consumers.

Inter-bank market rates for dollar on Friday

BID Rs 285.10

OFFER Rs 287.10

Open-market movement

In the open market, the PKR gained 10 rupees for both buying and selling against USD, closing at 286 and 289, respectively.

Against Euro, the PKR gained 3 rupees for both buying and selling, closing at 317 and 320 respectively.

Against UAE Dirham, the PKR gained 1 rupee 50 paisa for both buying and selling, closing at 80.50 and 81.30, respectively.

Against Saudi Riyal, the PKR gained 2 rupees for buying and 2 rupees 5 paisa for selling, closing at 78.00 and 78.75, respectively.

Open-market rates for dollar on Friday

BID Rs 286

OFFER Rs 289