Rupee Drops Below 299.50 Against US Dollar for the First Time in Pakistan’s History
In a historic development, the Pakistani rupee witnessed a drastic drop, breaching the 300 mark against the US dollar in today’s intraday trade. This decline, occurring amidst a backdrop of political turmoil and economic instability, has raised significant concerns.
Morning Blues: Rupee Slips Below 299 in Early Hours
During the initial hours of intraday trading, the rupee faced a steep decline, with the interbank rate plummeting by around 50 paisas. This led to a startling low of 300.25 against the US dollar by 10:15 AM. The decline, equivalent to a 0.2 percent drop from the previous day’s closure, underscores the volatility in the market.
Open Market Rates and Currency Counters: Awaiting Further Developments
While the open market rates have yet to show substantial shifts from the range of 307 to 312 reported earlier, the initial bids for the US dollar kicked off at 308. The situation remains fluid, with currency counters tracking developments closely.
PKC Rate Increase: Banks Respond to Market Conditions
Concurrently, the PKC (over-the-counter) rate extended by banks to the general public experienced a slight increase of 0.1 percent, reaching 300.6. This adjustment reflects banks’ efforts to align with the evolving market dynamics.
Market Dynamics: Rupee’s Dance Around 300
By 10:05 AM, the interbank rate settled at 300.25, with indications of further potential losses, in line with analysts’ earlier predictions. The precarious position around the 300 mark signifies a critical juncture for the rupee’s value.
Seller Hoarding Amidst Uncertainty: Greenback’s Future Unclear
Against a backdrop of uncertainty, major cash counters have seen sellers accumulating the US dollar. This trend underscores the prevailing ambiguity surrounding the future trajectory of the foreign currency.
Black Market Oscillations: Rates and Trends
The black market exchange rate has shown a widening gap compared to the bank rate, ranging between 312 and 318. This discrepancy, amounting to up to Rs. 15, results from the recent sharp decline. Experts attribute this to a complex interplay of market forces.
Market Analyst Insights: Factors at Play
Market experts attribute the recent rupee crash to a series of factors, including unexpectedly high Pakistani inflation forecasts and short-term trade deficit estimates. These indicators point towards a potential economic slowdown in the near future. Mixed signals from the stock market further contribute to the prevailing uncertainty.
State Bank Insights: Drivers of Depreciation
The Deputy Governor of the State Bank of Pakistan (SBP), Dr. Inayat Hussain, has indicated that escalating public demand for US dollars and the relaxation of import restrictions are primary contributors to the rupee’s depreciation.
Downward Spiral: Rupee’s Ongoing Depreciation
In a broader context, the rupee has witnessed a significant depreciation of nearly Rs. 82 since the start of 2023. When compared to April 2022, the decline becomes even more pronounced, exceeding Rs. 129 against the US dollar.
Economic Analyst’s Perspective: Road Ahead
Economic Analyst A H H Soomro shares a long-term perspective, noting that since 2018, the rupee has endured a substantial loss of over Rs. 196. The trend suggests that the USD/PKR exchange rate, which has consistently trended downward since April 2022, may continue its decline, possibly sinking further below the 300 mark in the days to come.
