Negative sentiment regarding resumption of the International Monetary Fund (IMF) programme further contributed to weakness in the rupee that depreciated to cross the 174 level against the US dollar in the inter-bank market on Thursday.

This was the fourth successive day the rupee fell against the US dollar.

As per the State Bank of Pakistan (SBP), the PKR closed at 174.19 against the USD after a day-on-day depreciation of Rs1.26 or 0.72%. On Wednesday, the PKR had dropped to 172.93 against the USD.

The rupee has lost nearly 9% of its value against the US dollar calendar-year-to-date, but almost 13% since its recent high achieved on May 7.

Pakistan's rupee weakens again, ends near 173 against US dollar

“News regarding the IMF programme delay is causing uncertainty in the market,” Tahir Abbas, Head of Research at Arif Habib Limited (AHL), told Business Recorder.

The market has been eagerly waiting for the IMF announcement, under which Pakistan would receive $1 billion.

However, despite the delay, Abbas remained positive.

“Improved Current Account Deficit (CAD) figures are also expected, alongside financing from Saudi Arabia and ITFC that would also improve the foreign exchange position,” said Abbas. “However, despite economic indicators moving in the right direction, negative sentiment owing to ambiguity over IMF negotiations is leading to PKR depreciation."

Abbas said that the rupee would reverse its downward slide as soon as uncertainty regarding the IMF programme ends. “PKR will move back to 170 against the USD,” said Tahir.

On the other hand, Asad Rizvi, ex Treasury Head Chase Manhattan Bank, said that the PKR losses surged due to the growing demand for dollar.

“Widening of the trade gap is hurting. The pressure is once again mounting on PKR due to supply constraints,” said Rizvi.

Inter-bank market rates for dollar on Thursday

BID Rs 174.19

OFFER Rs 174.29

Open-market movement

In the open market, the PKR lost one rupee for buying and 1.20 rupees for selling against USD, closing at 175.50 and 176.50, respectively.

Against Euro, the PKR lost 50 paisas for both buying and selling, closing at 201 and 203, respectively.

Against UAE Dirham, the PKR lost 1.05 rupees for buying and 1.10 rupees for selling, closing at 49.35 and 49.80, respectively.

Against Saudi Riyal, the PKR lost 35 paisas for both buying and selling, closing at 46.35 and 46.80, respectively.

Open-market rates for dollar on Thursday

BID Rs 175.50

OFFER Rs 176.50