Rupee dives to 197 vs dollar, recovers partially
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
Pakistani currency endured a steep decline of 1.5% and plunged to the historic low of approximately Rs197 against the US dollar in intra-day trade in the inter-bank market on Tuesday, but recovered partially towards the close of market following “the central bank’s intervention”.
The rupee closed at a new all-time low at Rs195.74 against the greenback, showing a day-to-day drop of 0.80% (or Rs1.56) compared to Monday’s close of Rs194.18, according to the State Bank of Pakistan (SBP) data.
“State Bank of Pakistan supplied dollars to the market to arrest the rupee’s free fall,” a financial market expert told The Express Tribune on condition of anonymity.
The rupee maintained its downturn ahead of the resumption of Pakistan’s talks with the International Monetary Fund (IMF) in Doha on Wednesday (May 18) for the revival of the stalled multibillion-dollar loan programme.
There is speculation in the market that the IMF may not agree to resume the loan programme following the government’s reluctance to implement the prerequisite conditions.
Earlier in April, the IMF called for withdrawing subsidies on petroleum products and electricity, reversal of the industrial amnesty scheme, and increase in tax rates in next year’s budget.
Finance Minister Miftah Ismail announced on Sunday that the PML-N led coalition government had decided not to increase energy prices for the time being and would try to persuade the IMF to relax the conditions.
Experts believe that the country badly needs the IMF programme to avoid the increasing risk of default on international payments including import payments and foreign debt repayment.
The country’s foreign exchange reserves have depleted to the critically low level at $10.3 billion that covers just six weeks of imports compared to the usual three-month import cover.
Tuesday was the eighth consecutive working day when the rupee maintained its downturn. Cumulatively, in the past eight days, the rupee has sunk 5.41% (or Rs10.05) to Rs195.74 compared to Rs185.69 on April 30.
Importers made panic buying of the US dollar against limited supplies, as exporters delayed the receipt of payments from foreign buyers anticipating the rupee may touch the Rs200 level soon.
Gold at new high
The gold price increased Rs1,500 to a new all-time high at Rs138,100 per tola (11.66 grams) on Tuesday, according to the Sindh Saraf and Jewellers Association (ASSJA).
The rise in the precious metal’s price came in the backdrop of rupee devaluation, as the bullion market meets the demand for the metal through imports.
Besides, a sharp increase in the commodity’s price in the world market pushed the domestic bullion trade body to revise the price upwards.
Published in The Express Tribune, May 18th, 2022.
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