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Monday June 27, 2022

Dollar once again surpasses 200 mark in interbank market

Since the start of this fiscal year, the rupee has collectively dropped by over 25%, or Rs40, compared to the previous fiscal year’s close at Rs157.54

By Web Desk
June 06, 2022
A representational image of a currency dealer counting Rs500 notes. — AFP/File
A representational image of a currency dealer counting Rs500 notes. — AFP/File

KARACHI: The Pakistani rupee closed at 200.06 against the US dollar in the interbank market amid concerns regarding the upcoming budget 2022-23 and the revival of the multibillion-dollar International Monetary Fund (IMF) programme.

According to the State Bank of Pakistan (SBP), the local currency shed 1.07% or Rs2.14 against the US dollar in the interbank market on Monday.

Since the beginning of this fiscal year (July 1, 2021) to date, the rupee has collectively dropped by a massive 26.98% (or Rs42.52) compared to the previous fiscal year’s close at Rs157.54.

The rupee has maintained a downward trend for the last 13 months. It has lost 31.38% (or Rs47.79) to date, compared to the record high of Rs152.27 recorded in May 2021.

Traders believe caution can be expected this week ahead of the unveiling of the Budget 2022-23 scheduled for June 10 (Friday), with investors expecting IMF conditions of fiscal consolidation to dominate.

Renewed pressure on the rupee on an increase in fiscal-year-end dollar demand from importers and the corporate sector will keep the local currency under pressure.

The report about China’s $2.7 billion deposit placement, meanwhile, has failed to entice traders as they don't see it as useful for fiscal or external support.

Financial expert Asad Rizvi said that credit rating agency Moody's had last week downgraded Pakistan's outlook from stable to negative due to external financing factors, to which the market reacted and the rupee dipped.

The financial expert further added choppy conditions would remain intact until the next fiscal year's budget and the IMF approves the next tranche of loan for Pakistan.