Rupee weakens to 142.7 against dollar in open market

Currency depreciation leads to a rise of Rs1,200 in per-tola price of gold

KARACHI: The Pakistani currency suddenly weakened over one-rupee to Rs142.7 to the US dollar in the open market on Friday as speculation mounted that Pakistan had agreed to let the rupee depreciate further under a stringent International Monetary Fund (IMF) bailout programme.

"There is speculation the rupee will depreciate to 165-170 against the US dollar in the inter-bank market as per IMF's conditions," Exchange Companies Association of Pakistan (ECAP) Secretary General Zafar Paracha said while talking to The Express Tribune.

During the day, the rupee remained stable at 141.39 to the greenback in the inter-bank market, the State Bank of Pakistan (SBP) reported.



Pakistan Forex Association President Malik Bostan said "market talk suggests Pakistan and the IMF have agreed to let the rupee fall to a certain level. However, there is no official word on the likely development."

Topline Research reported a couple of days ago that there were chances that the rupee would weaken 13-17% to 160-165 to the greenback by December 2019.

The speculation has led people in need of dollars to buy the US currency before it appreciates further. "Pilgrims who are about to perform Umrah or going for Haj later seem to be major buyers of the foreign currency these days," Paracha said.

With the latest drop of Rs1.1 on Friday, the rupee weakened by a total of 1.3 against the dollar in the open market in the past four days, according to forex.pk.

Earlier, the central bank let the rupee depreciate a massive 34% since December 2017 to date in a bid to boost sluggish exports and drastically cut imports to narrow down the current account deficit and improve balance of payments situation.



Bostan added that the demand and supply of dollar remained stable, but there was a jump in the demand for Saudi riyal.

About 1.4-1.5 million Pakistani pilgrims are expected to perform Umrah and Haj this year compared to 1.2 million last year. This has created additional demand for riyals and dollars.

"Riyals used to be in surplus to the tune of 7-8 million a day till the recent past, but the Umrah and Haj season has created additional demand equivalent to the surplus," Bostan said.

He said the open market exchanged foreign currencies worth $7-8 million a day.  This includes 50% trading in dollar and 50% in other foreign currencies.

"The flow of foreign currencies has remained stable in the open market these days as overseas Pakistanis are visiting the country to spend annual vacations with their families during Ramazan and are approaching exchange counters to exchange currency," he said.

"The month of Ramazan witnesses around 20% growth in the receipt of remittances through exchange companies every year as overseas Pakistanis remit higher amounts to their families to help them meet higher Ramazan and Eid expenditures," he said.

 

Gold rises Rs1,200 per tola

The All Sindh Saraf and Jewellers Association announced on Friday an increase of Rs1,200 per tola (11.66 grammes) in the price of gold that stood at Rs69,200.

The increase in the gold price came in the wake of rupee depreciation in the open market, an office-bearer of the association stated.

The price will remain valid for day-to-day trade till 4:30pm on Saturday nationwide as the association announces a new price for the next 24 hours every day, except for Sundays.

In the international market, the gold price inched up just $1 to $1,284 per ounce (31.10 grammes), the association reported.