The rupee’s overvaluation continues as conflicting reports about the International Monetary Fund’s improving lending program play on traders’ minds. The rupee has declined against the dollar due to concerns on the political and economic fronts.
The Pakistani currency jumped against the US dollar and topped 208 rupees against the dollar. The rupee was available at Rs 208.25 against the USD at 12:25 pm on Thursday.
The national currency rose 1.79 rupees to a record low of 208.25 rupees against the dollar at 12:25 pm The rupee had closed at 206.46 rupees on Wednesday, according to the central bank.
The latest overvaluation comes after the US Federal Reserve System Bank raised its key interest rate by 75 basis points. The Fed’s hike is expected to strengthen the US dollar against world currencies, including the Pakistani rupee.
In addition, there are unconfirmed reports in the market that some of the export orders from Pakistani exporters have been cancelled, which will further limit the supply of US dollars in the local market.
The head of reserves at Arif Habib Limited said the uncertainty of the revival of the International Monetary Fund’s lending program for Pakistan has continued to increase pressure on the rupee.
The reactivation of the International Monetary Fund program is necessary to manage the balance of payments crisis.
Pakistan’s foreign exchange reserves have been depleted to a critical level of six-week import coverage at $9.2 billion as of last Thursday. Reserves may fall further when the central bank releases its weekly reserve update on Thursday (today) night.
The local currency’s freefall continues as the Pakistani rupee tumbled and crossed Rs205 against the US dollar for the first time in the interbank market on Tuesday, as conflicting reports on the revival of the International Monetary Fund’s lending program played to minds. of traders and made the forex market nervous.
The rupee lost 0.63% (or 1.30 rupees) to settle at 205.16 rupees against the dollar compared with Monday’s close of 203.86 rupees, according to data from the State Bank of Pakistan.
The rupee had earlier tumbled to a new all-time intraday low of Rs 205.77 before partially recovering at market close.
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