Pakistani rupee inched down against the US dollar in the inter-bank market on Monday and slipped by five paisas.
The State Bank of Pakistan (SBP) said in a tweet that the rupee opened at 279.28 against the dollar in the interbank market and closed at 279.33, depreciating by -0.02 percent. Out of the last 41 sessions, the rupee has surged in 35 sessions and lowered in five sessions, while it remained unchanged in one session.
Overall, the local unit improved by Rs0.13 against the greenback last week while it gained Rs7.84 during the previous 13 weeks, which it closed on a positive note. The rupee has improved by Rs8.95 during the current fiscal year 2023-24. The local unit improved by Rs2.36 in January and Rs3.31 in December, while it shed Rs3.69 against the US dollar in November after gaining Rs6.26 (+2.23 percent) against the greenback in the month of October.
On the other hand, the local unit lost traction against the greenback in the open market. The rupee was quoted at 279.19 for buying and 281.19 for selling, according to data provided by different exchange companies. The rupee surged by Rs2 against the greenback in January while it gained Rs3.50 in December.
The financial markets are embracing the incoming government following last week’s elections in the country. However, the uncertainty arising from delays in election results has adversely impacted the financial markets.
The election outcome points to increased political instability, casting a darker shadow over growth and prospects for securing International Monetary Fund (IMF) aid the country needs to avoid default, said Bloomberg.
With no party winning a majority, and a strong performance by independents backed by Imran Khan (who is in jail and whose party was banned from running), the formation of a coalition government is likely to be challenging and chaotic, it added.
“The market needs clarity,” Bilal Khan, head of international sales at Karachi-based brokerage Arif Habib Ltd told Bloomberg. “The election was on February 8 and we still don’t know who is forming the government,” he added.
In a related development, Pakistan’s foreign exchange reserves reached $8.04 billion with a 2.1 percent week-on-week decline. The SBP explained that the reduction in reserves came as a result of debt repayments by the country. According to data released by the SBP, its foreign currency reserves registered a drop of $173 million and reached $8,044 million in the week ended on February 2, 2024 compared to the previous week’s total of $8,216.5 million. With the addition of commercial banks’ foreign currency reserves, Pakistan’s total liquid reserves stood at $13,097.6 million. Of these, the commercial banks held net reserves of $5,053.6 million.