Pakistani rupee crashes against US dollar for 11th day in a row

For the eleventh session in a row, Pakistan’s rupee has lost value versus the US dollar, falling 0.41 per cent on Friday in the interbank market as the dollar gained momentum throughout the world and investors’ concerns about the increasing trade imbalance intensified.

The rupee dropped by Rs0.96, according to the State Bank of Pakistan (SBP), and ended the day at Rs236.84. The rupee has lost Rs18.24, or 7.7 per cent, overall over the last 11 trading sessions against the US dollar.

In the interbank market on Thursday, the Pakistani rupee declined against the US dollar for the tenth straight session as investors expected funding from allies and foreign creditors. It ended the day down 0.66 per cent at Rs235.88.

The local currency increased in value last month as a result of Pakistan fulfilling all previous IMF requirements, which allowed the programme to resume. This development enabled Pakistan to receive $1.17 billion under the Extended Fund Facility (EFF).

The local currency has recently, however, been under intense pressure once more and is currently hovering close to its all-time low as funding anticipated from allies has not yet materialised.

Additionally, the State Bank of Pakistan’s (SBP) foreign exchange reserves decreased by $176 million, reaching $8.62 billion as of September 9, 2022, according to information made public on Thursday.

According to the SBP, the nation possessed $14.32 billion in liquid foreign reserves. Commercial banks held $5.7 billion in net foreign reserves.

Globally, the dollar remained close to recent highs on Friday as Treasury yields rose and the demand for the currency persisted on expectations that the Federal Reserve would need to raise rates further to control inflation.

The US dollar index, which compares the value of the dollar to a basket of other currencies, increased to Rs109.69, which is not far from its two-decade high of Rs110.79.

In the meantime, oil prices—a crucial factor in determining currency parity—were largely stable on Friday, but they were headed for a weekly decrease due to worries about sudden interest rate hikes that would likely slow global economic growth and fuel demand.