Rupee snaps losing streak

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94

Pakistani rupee snapped its five-day losing streak against the US dollar in the inter-bank on Thursday and recovered 94 paisas (+0.56 percent).
According to the State Bank of Pakistan, the US dollar opened at Rs169.12 and closed at Rs168.18. The rupee made historic lows against the dollar during the last two sessions. Within the open market, the rupee was traded at Rs168.70/169.50 per dollar.
Overall, Pakistani rupee shed Rs0.16 in the last four days against the US dollar, while depreciation during the fiscal year 2021-22 has been Rs10.74. The local unit has shed Rs7.91 against the US dollar in the current year 2021. The local currency has maintained a downtrend after it touched 22-month high of Rs152.27 in May 2021, losing a cumulative Rs15.87 in the past four months to date.
Market sources said that dollar inflows were seen during the day. They believed that the State Bank of Pakistan (SBP) intervened to support the local currency.
The currency experts said that the dollar’s demand remained high due to external payment, which resulted in increased dollar’s demand. The prices of oil and food items are soaring in the world markets. In addition to this, businesses are set to make hefty imports of plant and machinery to set up new factories and expand the existing production lines under the central bank’s initiative Temporary Economic Refinance Facility (TERF), they said.
They said the rupee is under immense pressure due to unfavourable macro economic data and Afghanistan’s situation. They said that the rising deficit in the current account is also a major concern for the market.
They were, however, optimistic that there is no space left for rupee to maintain the downturn, saying if it drops any further, the decline would be unsustainable and short-lived.
Markets hate uncertainty even more than bad news; since they are still able to factor in the latter. It’s no surprise, then, that the rupee’s troubles have dragged the buoyant stock market down with it as well. Governor SBP, through his silence, has been guilty of negligence that borders on the criminal, but hopefully the uncertainty will be brought to a quick end even if the bad news is expected to roll in for a while longer.