Pakistani currency on Wednesday hit nearly one-month low above Rs282.50 against the US dollar in inter-bank market, as it maintained the losing streak for the eighth consecutive day ahead of first IMF review under the $3 billion loan programme.

According to State Bank of Pakistan’s (SBP) data, the rupee lost 0.42%, or Rs1.18, and closed at Rs282.65 against the greenback amid market talk of a surge in the demand for dollars.

With the latest, comparatively larger drop in recent days, the currency has cumulatively declined slightly over 2%, or Rs5.82, in the past eight working days.

Talking to The Express Tribune, Exchange Companies Association of Pakistan (ECAP) General Secretary Zafar Paracha said the persistent decline of the rupee was partly due to the rising demand for the greenback and partly on account of speculation that the rupee would sink again.

“Banks are once again speculating about rupee depreciation…and media articles from influential people are saying the currency will dive to Rs320-324/$ soon,” he said.

Earlier, the rupee made a staggering recovery of 11%, or more than Rs30, over six weeks, reaching a three-month high at Rs276.83/$. The rebound came after the government launched a crackdown on foreign currency smugglers and hoarders.

Goldman Sachs, however, projected recently that the rupee rally would prove short-lived.

In open market, the currency dropped 0.17%, or Rs0.50, at Rs283.50/$, according to ECAP.

Paracha said the International Monetary Fund’s (IMF) first review, beginning Thursday, was also impacting the rupee, adding that speculation the lender wanted to see depreciation of the rupee was weakening the currency.

He said exporters, while expecting further fall of the rupee, had slowed down the release of dollars in inter-bank market. On the other hand, the importers are scrambling to buy dollars at prevailing prices.

Market talk indicates that the Middle Eastern crisis and the associated uncertainty in international oil markets have forced importers to purchase dollars at high prices as a prolonging of the crisis may take oil prices to new peaks.

Gold drops

The gold pricing body revised down the commodity’s price by Rs1,200 to Rs211,800 per tola (11.66 grams) in line with the global trend.

All Pakistan Saraf Gems and Jewellers Association reported that bullion decreased $19 to $1,996 per ounce (31.10 grams) in the international market.

Published in The Express Tribune, November 2nd, 2023.

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