Rupee Drops to Another Low Against US Dollar As SBP ‘Discourages’ Currency Trade

The Pakistani Rupee (PKR) dropped to another all-time low against the US Dollar (USD) during intraday trade today. It depreciated by 0.66 percent against the USD and closed at Rs. 229.88 after losing Rs. 1.53 in the interbank market today. The local unit quoted an intra-day low of Rs. 233.0 against the USD during today’s open market session. Since the regime change, the greenback is up by Rs. 45.93 against the PKR. The rupee extended its losing run for the fifth consecutive day amid reports that the State Bank of Pakistan (SBP) is “discouraging” interbank trading due to the scarcity of dollar notes in the market. People familiar with the matter told Bloomberg that the central bank has asked commercial lenders to manage import-payment queries from their own inflows, such as exporter accruals and remittances. Political pressure was cruel on market sentiments as well, as the toxic confusion around who governs Punjab is impeding the progress of the rupee. Moreover, fears over Pakistan’s stalling economy have grown after its currency plunged about 8 percent versus the US dollar in the previous week, while the country’s forex reserves are below $10 billion and inflation is at its worst level in more than a ten years. Globally, oil prices rose on Monday in seesaw trading as the market balanced supply concerns with expectations that a hike in US interest rates would weaken crude demand. After briefly going down, Brent crude was up by 1.04 percent at $104.3 per barrel, while the US West Texas Intermediate (WTI) edged above the morning levels after futures appreciated by 1.11 percent to settle at $95.75 per barrel. The PKR started the week with more losses against the other major currencies in the interbank market today. It lost 39 paisas against the Saudi Riyal (SAR), 41 paisas against UAE Dirham (AED), Rs. 2.86 against the Euro (EUR), and Rs. 3.00 against the Pound Sterling (GBP). Moreover, it lost 67 paisas against the Canadian Dollar (CAD) and Rs. 1.41 against the Australian Dollar (AUD) in today’s interbank currency market.