Rupee snaps seven-day winning streak
Rupee appreciated 1.89% day-on-day, but it was still down 14.7% since the beginning of current fiscal year on July 1, 2021. Photo: file
After seven days of modest recovery, the rupee depreciated once again on Monday and shed Rs0.99 against the US dollar in the inter-bank market to close at Rs182.54 owing to the return of speculation in the foreign currency market and uncertainty about the resumption of International Monetary Fund (IMF) loan programme.
According to the State Bank of Pakistan (SBP), the rupee closed at Rs181.55 on Saturday.
“After a gain of 3.61% in seven consecutive sessions, the rupee slid 0.54% day-on-day on Monday,” stated a report of Arif Habib Limited.
It added that the local currency had lost 16.58% since the start of the ongoing fiscal year on July 1, 2021.
Speaking to The Express Tribune, Arif Habib Commodities Chief Executive Officer and Managing Director Ahsan Mehanti stated that speculation had returned to the foreign exchange market as the resumption of IMF programme did not look imminent.
“Moreover, the people now expect the IMF to come up with difficult terms that will need to be incorporated into the next budget,” he said. “Uncertainty regarding engagement with the IMF has mounted pressure on the rupee.”
AA Gold Commodities CEO Adnan Agar cited that lack of clarity over the IMF programme was the prime factor driving the rupee’s decline.
Moreover, the cabinet of Prime Minister Shehbaz Sharif had not yet been formed, therefore, there was general panic in the market, which led to fluctuation of the rupee, he said.
Finally, dollars flew out of Pakistan over the past few days for different reasons and it would take time to attract the same amount back to the country, hence that factor was also weighing on the local currency, he said.
Arif Habib Limited Head of Research Tahir Abbas stated that the rupee fell after a seven-day uptrend, which was driven by political clarity.
“The rupee is moving back to equilibrium aided by market fundamentals,” he said.
He, however, held the view that the rupee could appreciate to Rs177-178 against the US dollar in the coming days. “There is enough room for further appreciation of the rupee against the greenback,” he said.
Published in The Express Tribune, April 19th, 2022.
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