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Thursday February 09, 2023

Political uncertainty ahead of long march snaps rupee's gaining streak

Rupee closes at 220.68 against greenback; analysts cite political uncertainty, import payment pressure as major reasons

By Web Desk
October 26, 2022
A man counts dollar bills. — AFP
A man counts dollar bills. — AFP

KARACHI: The Pakistan rupee on Wednesday succumbed to import payment pressure and political uncertainty in the wake of the long march date announced by PTI chief Imran Khan.

Pakistani rupee, after a brief winning streak for the local currency in the preceding three trading sessions in the interbank market, once again closed above the psychological barrier of Rs220.

The local unit closed at Rs220.68 after gaining Rs0.95, or 0.43% against the greenback in the interbank market.

'Little pressure'

Arif Habib Limited's Head of Research Tahir Abbas, while speaking to Geo.tv, said the local unit is facing a "little pressure" in the interbank market.

He said that it seems like Pakistan has received funding from the Asian Development Bank (ADB) and the foreign exchange reserves stand in a better position.

"Most likely, allocation of $2 billion in funds from the World Bank will be received in November or December," he said, adding that the International Monetary Fund's (IMF) review scheduled in November will provide some relaxation and some targets will be eased up.

Prime Minister Shahbaz Sharif's visit to China next month is expected to tap into new investment opportunities and there might be talks about rescheduling, he said.

"This is a daily basis depreciation, however, the currency will consolidate between 215 to 220," he added.

'Rupee movement is market-determined'

Speaking to The News, Pakistan-Kuwait Head of Research Samiullah Tariq said that the rupee movement is market-determined, so the supply derives the demand.

He added that there is a bit of pressure from the imports and the political uncertainty impacted the currency.

Tariq said that the market depended on the ADB's funds and that it would reverse the impact. However, according to the recent government system, the number of dollar outflows will be the same as inflows.

He added that the effect of backlog from the two-three days can be seen on the parity.