Rupee saw no respite on Friday and closed at 208.75 against the US dollar in the inter-bank market due to panic over the International Monetary Fund’s (IMF) $6 billion Extended Fund Facility (EFF) and the fall in foreign exchange reserves held by the State Bank of Pakistan.
During intra-day trading, the currency fell to as low as 209.12 before making a slight recovery by the end of the session.
At close, the local currency finished with a loss of Rs1.08 or 0.52% to close at Rs208.75 per dollar.
The fall comes as the present government desperately seeks to resume the IMF programme and secure the next tranche worth $900 million.
In this regard, the government announced a third hike in the prices of petroleum products on June 15 in less than three weeks, as it looked to quickly appease the IMF that emphasised the termination of energy subsidies.
3rd time's a charm?: Govt hikes price of petrol by Rs24.03, diesel by Rs59.16
Meanwhile, foreign exchange reserves held by the SBP decreased another $241 million to stand at $8.99 billion, said the central bank on Thursday, with the level staying at much less than 1.5 months of import cover.
This is the lowest level of SBP-held foreign exchange reserves since November 2019, and raises questions on Pakistan's ability to meet its needs going forward.
Critical level: SBP-held foreign exchange reserves fall to $8.99bn, lowest since Nov 2019
The local currency also took a hit after the US Federal Reserve announced the biggest rate hike since 1994 and dollar strengthened significantly against global currencies.
New day, new low: Rupee closes at 207.67 against dollar
Talking to Business Recorder, Alpha Beta Core CEO Khurram Schehzad said that the uncertainty surrounding the resumption of IMF bailout is denting sentiment in the currency market.
“The demand for dollars remains high in the market and this factor is driving its value upward against the rupee,” he said. “The local currency will likely witness volatility until the IMF agrees to disburse the next tranche of loan to Pakistan.”
IMF says didn’t ask Pakistan to renegotiate CPEC IPP deals
Earlier, Arif Habib Limited Head of Research Tahir Abbas said that the local currency was extending its fall on account of post-budget uncertainty.
Finance Minister Miftah Ismail had earlier said that the government's budget 2022-23, announced last week, failed to convince the IMF to disburse the next tranche to Pakistan, and amendments would be needed in the finance bill.
“The finance minister has clearly stated that IMF is not happy with the budget and there will be changes to it,” said Abbas.
“Once the amendments are incorporated in the Finance Act, only then will the rupee stabilise.”
Inter-bank market rates for dollar on Friday
BID Rs 208.90
OFFER Rs 209.10
Open-market movement
In the open market, the PKR lost 2 rupees for buying and 2.50 rupees for selling against USD, closing at 210 and 212, respectively.
Against Euro, the PKR lost 4 rupees for both buying and selling, closing at 221 and 223, respectively.
Against UAE Dirham, the PKR lost 30 paisas for both buying and selling, closing at 57.10 and 57.50, respectively.
Against Saudi Riyal, the PKR lost 10 paisas for both buying and selling, closing at 55.90 and 56.30, respectively.
Open-market rates for dollar on Friday
BID Rs 210
OFFER Rs 212