On the sixteenth consecutive working day, the Pakistani currency faced a setback, reaching a seven-week low near Rs288 against the US dollar in the interbank market on Tuesday. Importers cautiously increased their dollar holdings, causing a fresh loss of 0.11%, or Rs0.32, resulting in a closing rate of Rs287.87, as per the State Bank of Pakistan’s (SBP) data.
This ongoing depreciation has led to a cumulative loss of 3.83% or Rs11.04 in the past 16 working days, eroding the substantial gains made in mid-October when the rupee touched a three-month high at Rs276.83/$. The Exchange Companies Association of Pakistan (ECAP) reported that the currency closed unchanged at Rs289/$ in the open market.
As market speculations revolve around the ongoing International Monetary Fund (IMF) review, scheduled to conclude on Wednesday, the direction of the currency hangs in the balance. A positive outcome, where both sides reach a staff-level agreement, may offer some relief and assist in the partial recovery of recent losses. However, any delay in achieving such an agreement could escalate pressure on the rupee.
Despite recent setbacks, optimism prevails as the market widely expects a positive conclusion to the Pakistan-IMF negotiation for the next tranche of $710 million. The IMF is anticipated to disburse the second instalment of the loan in December after obtaining the final approval from its executive board.
Read: PSX crosses 56,000 points as rupee continues downward trend
Moreover, the expected receipt of an additional $600 million from Chinese commercial banks in December is seen as a potential boost to sentiment. This injection of funds may help the rupee partially recover recent losses, contributing to the stabilisation of the rupee-dollar parity near current levels.
Gold shines
In parallel developments, the All Pakistan Sarafa Gems and Jewellers Association announced a revision in the gold price on Tuesday, increasing it by Rs1,000 to Rs212,800 per tola (11.66 grams) in Pakistan. This adjustment aligns with the global trend, as the price of the precious metal rose by $5 to $1,965 per ounce (31.10 grams) in the international market on the same day.
Published in The Express Tribune, November 15th, 2023.
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