The Pakistani rupee (PKR) reversed gains and sharply declined against the dollar during interbank trade on Tuesday, going as low as 262.125 against the greenback.
At close, the rupee depreciated by 0.60 percent and suspended movement at 261.5 after losing Rs. 1.58 against the greenback.
The local unit was all red against the dollar and opened trade at 259.5 in the open market. By midday, the greenback went higher against the rupee to around 262. After 1 PM, the local unit was largely bearish against the top foreign currency before the interbank close.
The rupee ended its 4-day winning streak against the dollar today after the State Bank of Pakistan (SBP) announced to push up its Monetary Policy Committee meeting to March 2nd, 2023, and raise the policy rate to offset negative macros as the government works to meet the terms of a $6.5 billion bailout from the International Monetary Fund (IMF).
The rupee is down almost Rs. 26 since its record-breaking single-day drop of Rs. 25 in the last week of January and has since then gradually parried small losses despite economic pressure.
To recall, the SBP first increased the benchmark policy rate in January 2023, to 17 percent, the highest in over two decades. Pakistan’s bond auction last week signaled that the central bank is expected to raise its interest rate, which is seen as a condition for reviving the country’s loan program with the IMF. Analysts expect the rate hike by 150 to 250 basis points.
Money changers say last week’s high-priced treasury bill auction finally convinced the central bank to call an urgent market review meeting in a bid to offset near-term economic downturns. The IMF’s influence is playing a big role in making SBP push for a policy shift as it enforces all pre-conditions for releasing a billion-dollar bailout to Pakistan.
The PKR was all red against all of the other major currencies in the interbank market today. It lost 40 paisas against the Saudi Riyal (SAR), 43 paisas against the UAE Dirham (AED), 78 paisas against the Australian Dollar (AUD), Rs. 1.10 against the Canadian Dollar (CAD), and Rs. 2.92 against the Euro (EUR).
Moreover, it lost Rs. 4.04 against the Pound Sterling (GBP) in today’s interbank currency market.