The US dollar appreciated by more than Rs2 in the interbank market on Monday to cross the Rs200 mark, with analysts forecasting that the rupee would continue to fall as outflows for oil payments and other imports persist while matters with the International Monetary Fund (IMF) are yet to be finalised.
According to the Forex Association of Pakistan (FAP), the greenback gained Rs2.25 to reach Rs200.40 against the previous close of Rs198.15. In the open market, the value of the dollar had risen to Rs200 at noon.
The rupee's slide against the dollar began early in the session today, following which FAP Chairperson Malik Bostan and Exchange Companies Association of Pakistan General Secretary Zafar Paracha pointed out that the greenback's demand had risen on account of oil payments that were to be made today.
Paracha also claimed that banks were manipulating the dollar's rate, contributing to the decline in the local currency's value.
Former treasury head at Chase Manhattan, Asad Rizvi, told Mettis Global — a web-based financial data and analytics portal — that the conditions would remain choppy until the budget and the approval of the IMF for the resumption of its loan facility for Pakistan.
Moreover, he said, “Moody's on Thursday downgraded Pakistan's economy's outlook from stable to negative due to the external financing factor, and the market reaction saw the PKR dipping. Closure of market in the Middle East also added pressure.”
Mettis Global director Saad Bin Naseer further explained that outflows on account of external debt repayments and imports amid uncertainty surrounding inflows from the IMF and the other bilateral agreements had caused the rupee to lose value against the dollar.
"However, any official announcement from the IMF or other bilateral countries could help stabilise the exchange rate parity," he told Dawn.com.
According to Komal Mansoor, head of research at Tresmark, "there is a backlog of outflows in the market which need to be settled before June end, including dividend repatriation and debt repayments.
"This will continue to exert pressure on the local currency for the next few weeks,” she said.
Today is the second consecutive session that the dollar has continued its ascent against the rupee after snapping the local currency's five-day winning streak on Friday.
According to data released by the State Bank of Pakistan, the rupee had started gaining against the US dollar on May 27 and kept appreciating for five consecutive sessions. This was after the greenback's persistent rise on account of the country's swelling imports, declining foreign exchange reserves and uncertainty surrounding the IMF's $6 billion facility, which has been stalled since April.
On May 19, the dollar had reached a record high of Rs200 for the first time, and respite for the rupee had come only after the government had increased the petroleum prices by a whopping Rs30 a litre, paving the way for the release of a $1 billion tranche from the International Monetary Fund. Subsequently, the greenback had lost Rs2.25 in a single session to fall to Rs199.76 on May 27.
The dollar's recovery on Friday, after consistently losing ground against the rupee for five days, was termed temporary by currency dealers, who attributed it to oil price shocks that would increase inflation.
However, the expected inflows from the IMF and China could once again support the local currency, they told Dawn.
Finance Minister Miftah Ismail has expressed hope for an IMF deal and rollover of a $2.3 billion Chinese loan that would improve the foreign exchange reserves of the country.