Karachi August 19 2022: Pakistan Rupee drops nearly 2 rupee in the interbank against dollar as foreign currency shortages hit open market amid traders weighing interest rates to remain unmoved in the upcoming Monetary Policy Committee (MPC) meeting at a time when dollar is strengthening in the international markets.
“Currency dealers said that the latest development has created a shortage of foreign currency, particularly the UAE dirham as each Pakistani needs to declare 5,000 dirhams at the UAE airport at the time of landing this week, and ultimately exportable currencies declined.” says Malik Bostan president of the forex association.
Majority of the market participants expects interest rates to remain unchanged in the survey conducted by CFA Society Pakistan. 81 percent of the respondents expects no change in the policy rate while 9 percent expects 50 basis points increase and remaining 9 percent foresee interest rates to go up by 100 basis points.
The U.S. dollar hit a fresh five-week high versus major peers on Monday after more Federal Reserve officials flagged the likelihood of continued aggressive monetary tightening ahead of the central bank’s key Jackson Hole symposium this week. The U.S. dollar index, which measures the currency against six rivals including the euro, edged up to 108.26 for the first time since July 15 early in the Asian session before trading flat at 108.12.
Rupee depreciates by Rs 1.8 or 1.01% in today’s trading session to trade at 216.45 in the interbank at PST 14:00. Still Rupee is up 10.7% from its low hit on 28th of July 2022 as country inching towards IMF deal.
The International Monetary Fund (IMF) Executive Board meeting for the combined seventh and eight reviews under the Extended Fund Facility (EFF) has been set for August 29th 2022, according to IMF representative. Approval of this will release $1.17 billion for Pakistan and provide comfort to other lenders that helps in arranging gross financing needs of $35 billion for this year.
