February 03, 2023 (MLN): The Pakistan rupee has hit an all-time low against the US dollar, settling at PKR 276.58 per USD after a depreciation of 5.22 rupees from its previous closing of PKR 271.36 per USD.
The rupee was traded in a band of PKR 8.25 per USD with an intraday high bid of PKR 278 and a low offer of PKR 271.75.
Over the course of a week, the rupee has lost almost 16.5 rupees against the dollar, a decrease of 5.96%.
The President of the Forex Association of Pakistan, Malik Bostan, attributes the devaluation of the rupee to the recent government decision to remove the cap on the dollar to beat the black market.
He stated that this was a condition of the International Monetary Fund (IMF) that dollar should be market driven and shift it to demand side.
Sana Tawfiq, an economic analyst at Arif Habib Limited, said that the sudden devaluation of the rupee today is due to a statement made by Shahbaz Sharif regarding the difficulties the IMF is giving Pakistan in reviving the ninth tranche.
The rupee is settling its level without any intervention from banks after the government's decision to remove the cap on the dollar.
The foreign exchange reserves of the State Bank of Pakistan (SBP) are now estimated to be $3.09 billion, a decrease of 16%.
On the trade side, imports in January 2023 decreased by 5.78% to $4.856 billion, compared to $5.154bn in December 2022.
Meanwhile, the currency has lost 1.5 rupees against the Pound Sterling, closing at PKR 337.37 per GBP, and 2.7 rupees against the Euro, closing at PKR 301.29.
On Friday, the SBP conducted an Open Market Operation (OMO) through which it injected Rs477.85bn into the market.
In the money market, the overnight repo rate was 17.60/17.75% at close and the 1-week rate was 16.75/16.85%.
