ISLAMABAD: Pakistan’s rupee was largely stable against the US dollar in the inter-bank market, and was hovering around the 239-240 level on Thursday.
At around 1:45pm, the rupee was being quoted at 239.75, a depreciation of Re0.10 or 0.04% against the greenback, during intra-day trading.
On Wednesday, Pakistan’s rupee had depreciated for the 14th successive session to settle with a loss of 0.31% at 239.65 against the US dollar in the inter-bank market, driven by expectations of a rising import bill and a strong USD on the international front.
The fall came ahead of the US Federal Reserve’s announcement in which it raised the key US interest rate again and said more hikes are coming as it battles soaring prices.
The increase took the policy rate to 3.0-3.25 percent, and the FOMC said it “anticipates that ongoing increases… will be appropriate.”
The rate hikes have added to the dollar’s strength, and put several currencies, including the Pakistani rupee under severe pressure.
In less than two months, the rupee has undergone a complete u-turn, approaching its all-time low against the US dollar in the inter-bank market, despite release of the International Monetary Fund (IMF) tranche of $1.16 billion.
The expectation of a rising import bill and a globally strong dollar kept market participants skeptical.
However, in a key positive development, Pakistan’s current account deficit shrank by 19% during the first two months of this fiscal year (FY23) due to a lower import bill and increase in exports.
The State Bank of Pakistan (SBP) Wednesday night reported that cumulatively, the country recorded a CAD amounting to $1.92 billion in Jul-Aug of FY23 compared to $2.374 billion in the same period of last fiscal year, depicting a decline of $456 million.
The decline in the current account deficit is due to an 11% surge in exports and some 2% contraction in the import bill, the SBP said.
Globally, the dollar surged to a fresh two-decade high on Thursday after the Federal Reserve also projected raising interest rates further and faster than investors had expected in order to tame inflation.
The dollar index, a measure of the greenback against a basket of majors, extended Wednesday gains to make a new 20-year high at 111.72 during the Asia session.
Oil prices, a key determinant of currency parity, rebounded on Thursday after sliding 1% in the previous session as concerns over tight supplies heading into winter eclipsed fears of a global recession.