The rupee also lost grounds against the dollar in the interbank market as it dropped down to a two-month low against the US dollar on Thursday.
In the interbank market, the rupee closed at 166.35 to the dollar, depreciating by Rs. 0.64 against the greenback. This level was last seen on 15th April 2020. It had settled at 165.71 on Wednesday.
Yaqoob Abubakar from Tresmark, an application that tracks the financial market, said that;
Rupee overall hit by Rs. 1.49 against USD in the ongoing week due to low supply and high demand of dollar in the market due to upcoming IMF payments, the decline in reserves and imports, and corporate payments. Parity closes today at Rs. 166.35 whereas last week it was closed at Rs. 164.24.
“Last week the market was expecting rupee to remain stable due to delay in debt payment from Paris club but as we know increases in COVID-19 cases Govt again imposes lockdown in different cities that created the sudden rise of demand from corporate buyers,” he added.
Adnan Sami Sheikh, a senior market analyst told ProPakistani,
There’s a good chance that we will see the dollar go higher maybe to Rs. 170 by the end of June 2020, which is also the fiscal year-end.
A.A.H Soomro, managing director at Khadim Ali Shah Bukhari Securities told ProPakistani, that inflows are temporarily drying up. He anticipates the PKR-USD parity will stabilize once IMF tranche is disbursed.
While some dealers said that the demand from dollars was seen on the importer’s side while some companies bought greenback to settle payments. It is worth mentioning that for the past two years, the rupee was seen wobbling in June against the greenback due to the fiscal year closing. In June, during both these years, the forex reserves were huge under pressure as well.
There is also fear that rupee will decline more in value against the US dollar which also encouraged investors to build up dollar positions. On the other hand, the inflows of Dollars from export earnings and remittances are going down due to Covid-19 that resulted in pressure on Rupee.
According to Daily Forex, the Pakistani Rupee continues to test important resistance and interestingly has developed a consolidated range this week. The USD/PKR is not known for a large amount of trading volume and its usual range is typically wider than it has displayed compared to its price action in the last few days. This development typically is interpreted by experienced traders as a signal for potential coming volatility.