Rupee comes under pressure once again

Currency loses Rs3.26 on panic buying of US dollar

KARACHI:

Pakistani currency came under mounted selling pressure for the second consecutive day on Wednesday where it fell to the one-week low at over Rs280 to a dollar in inter-bank market on panic buying of the greenback.

According to State Bank of Pakistan’s (SBP) data, the currency lost 1.16%, or Rs3.26, on a day-to-day basis, closing at Rs280.29.

Market talk suggests the currency market saw panic buying of US dollars for import payments. Pakistan also made interest payments to global investors for their investment in the country’s Eurobonds and Sukuk, resulting in additional demand for the greenback.

Earlier, a section of importers had put off dollar purchases as they awaited the exchange rate to settle down. Some market players had been of the view that the rupee could appreciate to as high as Rs250-260/$ in the recent one-month-long rally, which ended at Rs277/$ on Monday.

The currency recovered 11%, or over Rs30, in 28 consecutive working days, hitting over three-month high at Rs276.83/$. The rally came after the rupee touched the record low at Rs307.10/$ on September 5, 2023 before a crackdown on foreign currency smugglers and hoarders.

Read Anti-smuggling drive lifts rupee further

Citing banking sources, Topline Securities CEO Mohammed Sohail said on X, formerly Twitter, that Pakistan had made payments of six monthly coupons on the dollar Eurobonds maturing in April 2024.

In open market, the rupee lost 1.42%, or Rs4, and closed at Rs281/$, according to the Exchange Companies Association of Pakistan.

Despite the significant depreciation in the two markets, the difference between exchange rates remained nominal at Rs0.29. The International Monetary Fund (IMF) has recommended a ceiling of 1.25%, which comes to around Rs4 at current prices.

Gold up Rs6,400

The significant drop of Pakistani currency prompted the local gold pricing body to revise up the metal’s price by 3.19%, or Rs6,400, at Rs206,500 per tola (11.66 grams).

The uptrend in bullion was also in line with the global market where the precious metal jumped 1.87%, or $36, to $1,959 per ounce (31.10 grams), according to the All Pakistan Saraf Gems and Jewellers Association.

 

Published in The Express Tribune, October 19^th, 2023.

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