Dollar records decline in interbank trade

KARACHI: The interbank market witnessed “volatility” in the early morning trade when the US dollar recorded a decline before recovering within an hour, a forex trader said Wednesday.

According to data released by the State Bank of Pakistan (SBP), the local currency gained Rs1.31, or 0.65%, against the greenback.

“The rupee opened at 201.50 today and suddenly went down up to 199.40, recovering swiftly within 30 minutes to trade at 201.20,” General Secretary, Exchange Companies Association of Pakistan (ECAP) Zafar Paracha said in a statement.

“There is no sense of this volatility. This is causing discomfort in the market, shaking the confidence of importer, exporter and foreign investors,” he added.

The rupee fell to a record low on 202.83 on Tuesday, weighed down by payments for imports, foreign debt, and dividend repatriation, according to traders and analysts.

Speaking to Geo.tv, AA Commodities Director Adnan Agar said that the market sentiment is negative due to uncertainty regarding the ongoing financial crisis.

The analyst added that the market is volatile as investors are reacting to all developments regarding the upcoming budget, the International Monetary Fund (IMF) programme, and other economic indicators.

“The investors are concerned about the economic situation and the delay in decisions by the new coalition government,” he said.

Agar added that the currency is expected to remain volatile as oil prices are rising in the international market meanwhile, the government is expected to increase taxes in the upcoming federal budget for the next fiscal year 2022-23 which will increase inflation.

The analyst also highlighted that the price of petrol is expected to increase to Rs250-260 per litre which would negatively affect the rupee-dollar parity.