Rupee Finally Halts Rapid Fall Against US Dollar After Oil Prices Retreat

Rupee Finally Halts Rapid Fall Against US Dollar After Oil Prices Retreat

Today, the Pakistani Rupee (PKR) reversed its decline against the US Dollar (USD) and reported gains in the interbank market. At the close of the session today, the local currency had gained 27 paisas against the US dollar.

It gained 0.14 percent against the US dollar today, closing at Rs. 186.70, after losing Rs. 1.04 and closing at Rs. 186.97 in the interbank market on Thursday, April 21. During today’s open market session, the rupee fell to an intraday low of Rs. 187.52 against the US dollar.

The rupee closed in the green against the dollar today, after oil prices fell on Friday, weighed down by the prospect of weaker global growth, higher interest rates, and COVID-19 lockdowns in China, all of which hampered demand, even as the European Union considered a ban on Russian oil, which would further tighten supply. At the time of writing, Brent crude futures were down $1.59, or 1.47 percent, to $106 per barrel, while US West Texas Intermediate (WTI) crude futures were down $1.62, or 1.56 percent, to 102 per barrel.

In terms of factors influencing the domestic exchange rate, the new government does not intend to extend the tenure of current State Bank Governor Dr. Reza Baqir beyond his scheduled retirement date. Furthermore, the coalition government is expected to repeal the SBP (Amendment) Act, 2021, while granting the central bank independence over future monetary policy decisions.

Earlier in the day, Asad Rizvi, former Treasury Head of Chase Manhattan Bank, commented on the local currency’s performance, saying that after eight weeks, SBP’s net reserves had risen to $10.89 billion. Political unrest has recently added to the PKR’s woes. For the time being, two critical considerations are the SBP Governor’s term renewal, which expires in three weeks, and Miftah Ismail’s meeting with the IMF, as foreign exchange reserves are rapidly depleting.

In the interbank currency market today, the PKR reversed losses against the other major currencies and reported gains. It rose seven paisas against the Saudi Riyal (SAR) and the UAE Dirham (DHR) (AED).

In today’s interbank currency market, it gained Rs. 2.10 against the Canadian Dollar (CAD), Rs. 2.29 against the Euro (EUR), Rs. 2.60 against the Australian Dollar (AUD), and Rs. 3.29 against the Pound Sterling (GBP).

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