KARACHI
Pakistani rupee managed to recoup most of the losses during a volatile week against the US dollar and fell by 0.53 percent on a week-on-week basis.
According to the figures shared by the central bank, the dollar opened at Rs283.59 in the interbank market on Monday and closed at Rs285.08 on Friday. During the preceding week, the local unit was appreciated by 25 paisas (+0.09 percent) in the interbank market. Within the open market, the rupee opened at 286/289 a dollar on Monday and closed at 289/292 per dollar on Friday, after crossing the 300 mark on Thursday.
During the current fiscal year 2022-23, Pakistani rupee has lost Rs79.21 against the US dollar in the interbank, while it plummeted by Rs58.65 against the greenback in the current year.
The rupee started the week on a negative note versus dollar and struggled for the next four days. The local unit depreciated by 26 paisas (-0.09 percent) on Monday, 99 paisas (-0.35 percent) on Tuesday, Rs5.38 paisas (-1.85 percent) on Wednesday, and Rs8.71 paisas (-3 percent) on Thursday.
The losing spree picked up pace on Wednesday after the arrest of former prime minister Imran Khan a day earlier and the rupee printed one of the worst losses of history on Thursday due to political turmoil and law and order situation across the country.
Khan’s arrest sparked nationwide protests and drew criticism from political parties. The resulting political turmoil had a detrimental impact on investor confidence and the rupee’s value.
The rupee turned around against the US dollar on Friday, clawing back most of the losses of the week, and appreciated by Rs13.85 (+4.63 percent), as political temperature went down in the country.
The dramatic surge in rupee was witnessed after investors received positive cues from the political front, following the Supreme Court’s ruling declaring the arrest of Imran Khan as illegal, and the end of violent protests across the country.
Furthermore, Finance Minister Ishaq Dar’s reassurance that Pakistan would fulfil external obligations timely, with or without the International Monetary Fund (IMF), helped pacify markets.
Besides Khan’s arrest, ongoing uncertainties related to IMF negotiations and increased demand for the US dollar played a significant role in the instability of the rupee, creating confusion and panic in the market. This volatility highlighted the complex interplay among economic, political, and market factors that influence currency values, making them highly susceptible to fluctuations.
Pakistan has been facing a shortage in its foreign exchange reserves for quite some time, which is affecting the overall exchange rate, and business and economic activity in the country. Moody’s Investor Service has warned that Pakistan could default without an International Monetary Fund bailout.
The Washington-based lender has yet to approve the release of the crucial instalment of $1.1 billion, originally due to be disbursed in November last year as part of a $6 billion bailout secured in 2019.
