Rupee snaps two-day winning streak

Sheds 0.35% of value after govt raised import order ceiling

KARACHI:

Pakistani currency failed to sustain the upward trend on Wednesday, losing 0.35% (Rs0.78) on a day-on-day basis to close at Rs221.43 against the US dollar in the inter-bank market.

Earlier, the rupee had cumulatively gained 0.82% (or Rs1.82) in the past two consecutive working days.

The latest drop came after the government allowed traders to place import orders up to $100,000 each, which would further increase demand for the dollar. Earlier, the import orders were restricted to $50,000 each.

The increase in the value of import orders pushed up the demand for dollar in the market, resulting in weakening of the rupee-dollar exchange rate.

Besides, no concrete outcome was reported from Prime Minister Shehbaz Sharif’s visit to China on the first day. The market was expecting Beijing to announce fresh investments of billions of dollars under the China-Pakistan Economic Corridor (CPEC) project.

Besides, PM Shehbaz was expected to formally request Beijing to roll over a debt of $6.3 billion. Any announcement in this regard was still awaited. The rollover will provide support to the rupee against the greenback.

The market had witnessed appreciation of the rupee on Monday and Tuesday following the government’s warning of punitive action against the foreign currency hoarders and manipulators responsible for keeping the rupee undervalued.

Finance Minister Ishaq Dar issued the warning in meetings with representatives of banks and exchange companies at the central bank over the weekend.

Market experts said that the rupee would continue to trade in a range of Rs215-220 to a dollar in the short run.

It could record fresh gains once the World Bank, Asian Development Bank and Asian Infrastructure Investment Bank extend fresh loans of around $3 billion over the next two months (November and December 2022).

Published in The Express Tribune, November 3^rd, 2022.

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