Wednesday, May 22, 2024
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Rupee breaks losing streak after dropping to all-time low

  • Rupee trades at 202.50 against US dollar in interbank market.
  • Analyst says market sentiment is negative due to uncertainty regarding financial crisis.
  • A day earlier, rupee closed at an all-time low of Rs202.83.

KARACHI: The Pakistani rupee snapped its three-day losing streak and slightly rebounded on Wednesday against the US dollar in the interbank market during intraday trade.

However, it was trading above 202 threshold, according to Pak Revenue The rupee was trading at 202.5 against the US dollar in the interbank market as of 1:21pm.

AA Commodities Director Adnan Agar said that the market sentiment is negative due to uncertainty regarding the ongoing financial crisis.

The analyst added that the market is volatile as investors are reacting to all developments regarding the upcoming budget, the International Monetary Fund (IMF) programme, and other economic indicators.

“The investors are concerned about the economic situation and the delay in decisions by the new coalition government,” he said.

Agar added that the currency is expected to remain volatile as oil prices are rising in the international market meanwhile, the government is expected to increase taxes in the upcoming federal budget for the next fiscal year 2022-23 which will increase inflation.

A day earlier, the local currency shed Rs2.77, or 1.37%, to close at an all-time low of Rs202.83 surpassing its previous record low of Rs202 recorded on May 26.

Moreover, for the first time in its history, the local currency made a historical drop of Rs4.00 in a single day on Tuesday and surpassed Rs204 threshold against the greenback in the interbank market during the intraday trade.

The recent bearish spell began after the government hiked the price of petroleum products by a major Rs60 per litre as a result of removing subsidies — one of the main demands of the money lender.

The analyst also highlighted that the price of petrol is expected to increase to Rs250-260 per litre which would negatively affect the rupee-dollar parity.

Traders believe caution is expected this week ahead of the unveiling of the federal budget for the fiscal year 2022-23 scheduled to be announced on June 10 (Friday), with investors expecting IMF conditions of fiscal consolidation to dominate.

Renewed pressure on the rupee on an increase in fiscal-year-end dollar demand from importers and the corporate sector will keep the local currency under pressure.

“The rupee opened at 201.50 today and suddenly went down up to 199.40, recovering swiftly within 30 minutes to trade at 201.20,” Exchange Companies Association of Pakistan (ECAP) General Secretary, Zafar Paracha said.

“There is no sense of this volatility. This is causing discomfort in the market, shaking the confidence of importer, exporter and foreign investors,” he added.

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