In a persistent decline, the Pakistani currency marked its seventeenth consecutive working day of weakening, reaching a seven-week low above Rs288 against the US dollar in the interbank market on Wednesday. State Bank of Pakistan (SBP) data revealed a 0.09% drop, amounting to Rs0.27, with the currency closing at Rs288.14 against the greenback.
Cumulatively, the currency has depreciated by 3.92% or Rs11.31 over the past 17 working days, partially erasing the gains achieved in the prior six weeks, when it reached a three-month high at Rs276.83/$ in mid-October 2023.
Exchange Companies Association of Pakistan (ECAP) reported a 0.17% decline in the open market, with the currency sliding to Rs289.50/$.
The ongoing International Monetary Fund (IMF) review of Pakistan’s economy under its $3 billion loan programme contributed to the uncertainty, leading importers to cautiously buy the dollar at its rising price.
Read PSX crosses 56,000 points as rupee continues downward trend
Despite concerns, the capital markets largely anticipate a smooth review, as Pakistan is poised to meet most conditions and secure the second tranche of the loan, amounting to $710 million, likely in December 2023.
Market discussions suggest that a positive outcome of the review could aid the rupee in rebounding and stabilising around current levels. However, uncertainties prevail, as regional currencies, including the Pakistani rupee, may face pressure due to the prolonged Israeli aggression in the Middle East, potentially impacting oil prices globally.
T-bill auction
Simultaneously, the government addressed its financial needs by raising Rs1.16 trillion in new domestic debt through the sale of three to 12-month sovereign debt securities (T-bills) to commercial banks.
The rate of return on these securities fell by 45-50 basis points, settling near and around 21.50%.
Published in The Express Tribune, November 16th, 2023.
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