The rupee's value in the interbank market fell by Rs1.52 on Wednesday, closing the session at Rs159.83 against the US dollar, exchange rate figures released by the State Bank of Pakistan showed.
In the open market, one dollar was sold at Rs160.20 compared to Rs158.25 the previous day, according to data released by the Exchange Companies Association of Pakistan.
“After remaining almost stable over the last two days, the rupee was Rs1.5 down against the dollar today, touching the level of Rs160 during the day. This weakening of PKR against the greenback seemed mostly sentiment-driven,” said Sana Tawfik of Arif Habib Ltd.
“The recent news of International Monetary Fund (IMF) officials visiting Pakistan soon and resumption of talks with the agency led to panic buying by importers and hedging their imports. Moreover, some banks squared their short positions which put further pressure on the currency. However, we believe PKR will remain range-bound till December, closing this year at the Rs161 level,” she said.
Adviser to the Prime Minister on Finance and Revenue Dr Abdul Hafeez Shaikh had said on Tuesday that an IMF staff mission will be arriving in a few weeks to discuss tax reforms, higher collections and improvements in the power sector.
The rupee had peaked at Rs158.16 against the US dollar on November 13, gaining about 6.1 per cent since hitting a low of Rs168.44 on August 26.
Bloomberg data showed the PKR as the third-best performing currency in Asia behind South Korean Won and Indonesian Rupiah. But since then, in the last three sessions, the local currency has depreciated against the dollar in the interbank market. The rupee has cumulatively lost Rs1.67 against the dollar since hitting a nine-month high of Rs158.16 on November 13, ending its longest winning streak since the SBP made data available.
“Rupee’s movement can be linked to oil payments and forward booking by some importers which led to exchange rate movement in the interbank market,” Zafar Paracha, the general manager of Exchange Companies Association of Pakistan, told Dawn.
“This is short-term volatility and the rupee will likely recover in the next few days,” he added.