Pakistani Rupee hits lowest in history
The Pakistani rupee plunged to an all-time low against the US dollar during intraday trade today, making history.
The interbank rate lost Rs. 19 over the first four hours of intraday trading today, falling as low as 240.23 by one o’clock. After opening at247, open market rates for the dollar rose to highs of 250–251 across several currency counters.
PKR lost 24.54 rupees at the time the market closed, depreciating by 9.61 percent to close at Rs. 255.43. Before the market closed, it posted an intraday low of 257 against the US dollar.
The local currency, which was red when compared to the dollar, started trading at 244 on the open market. By noon, the dollar had risen to a high of 250 against the rupee. After 3 PM, the local currency kept falling and, until the interbank close, was trading at 255 versus the top foreign currency.
According to market sources, the local currency will today be at the mercy of market forces following the two trading sessions where it became widely accepted that neither the SBP nor exchange companies would be able to regulate changes in the value of the dollar relative to the PKR.
According to independent economic analyst A H H Soomro “It’s a delayed adjustment of the currency that is incredibly necessary to reduce grey market appeal and encourage USD flows away from hawala hundi.Nation will observe a sharp improvement in the remittances drop once interbank is closer to open market, which will easily push the current account to surplus.”
Money changers believe that today’s sharp decline is a surgical response to the International Monetary Fund’s (IMF) demand for the enactment of a mini-budget worth Rs. 200–300 billion in order for it to release the remaining funds under its $7 billion extended fund facility to the South Asian economy. This is in addition to the government releasing its hold on the exchange rate.
“The much-anticipated PKR adjustment has been done today by allowing banks to quote rates based on market demand-supply,” Topline Securities CEO Muhammad Sohail stated. This was the case up to September2022, but after that, the bank rate was maintained in a small range, creating the black market.
The nation’s top financial official has remained silent during the market response to this week’s mounting anger toward policymaking and SBP blockades as he attempts to prevent additional catastrophe. The PKR against the US$ in the interbank market has been moving in a narrow band and was being managed to show signals of stability after Ishaq Dar’s appointment as Finance Minister on September28, 2022. In reality, PKR increased after falling to a low of Rs. 240 just prior to his appointment because he thought the currency was undervalued.
In any case, according to money changers, the market’s tremendous escalation today is caused by a shortage of dollars, which has led to a considerable increase in the disparity between interbank and open market rates.
Since the beginning of the 2022–23 fiscal year, which ends on June 30th, the official value of the rupee has fallen by 12% against the dollar. The current trends indicate that the central bank’s authority over currency is slowly giving way to the market-determined free float. As anticipated earlier that this would completely eradicate the power of the illicit market, but all parties involved in the situation should be prepared to witness PKR developing resistance in the sticky range over 250.
In the interbank market today, the PKR was unfavorable relative to all other significant currencies. It dropped versus the Saudi Riyal (SAR), the UAE Dirham (AED), the Australian Dollar (AUD), the Canadian Dollar (CAD), and the Euro (EUR), losing Rs.6.5, Rs.6.7, Rs.17.7, Rs.17.9, and Rs.27.5, respectively (EUR). In addition, it dropped 32.4 rupees versus the British pound (GBP) in today’s interbank currency market.
Nation continue to worry as Pakistani Rupee hits lowest in history.