During intraday trade today, the Pakistani rupee (PKR) plunged to nearly its all-time low against the US dollar as doubts about a crucial rescue from the International Monetary Fund (IMF) and the most recent downgrading from Moody’s undermined the fundamentals of the exchange rate.
The interbank rate lost Rs. 12 during the first two hours of intraday trading today, falling as low as Rs. 278 at 11 AM. It has lost Rs. 22 by 11:25 AM, crashing to $285.
After opening at 277, open market rates for the dollar reached highs of 288 to 290 across several currency counters. For the time being, money changers have halted the outflow of dollars, a trader briefly told ProPakistani today.
Topline Securities CEO Muhammad Sohail noted that the IMF funding delay is causing anxiety in the currency market in response to the sharp depreciation of the PKR.
The impact of Moody’s most recent junk classification of Pakistan’s local and foreign currency issuer and senior unsecured debt ratings to Caa3 from Caa1 caused the Pakistani rupee (PKR) to decline by almost 7.2 percent against the dollar during intraday trade on Thursday, falling as low as 285 against the dollar.
Compared to the lows of 271-274 per US dollar last week, the domestic currency has plunged by about 6% on the open market, reaching a record low of 290 per US dollar. Since Monday of last week, the rupee has depreciated by more than 9.2 percent.
A H H Soomro, a free-lance analyst, stated, “I believe they’re seeking to raise SBP reserves and honour outstanding import payments. Thus, the cap-control may have been removed in favour of an exchange rate set by the market.
Since its record-breaking single-day plunge of Rs. 25 in the final week of January, the rupee has lost over Rs. 52 and has since steadily limited minor losses despite economic pressure. The PKR has lost Rs. 22 today, its worst decrease since the all-time low dip of Rs. 24.54 in January, according to exchange rate movements seen today.
The local currency will probably lose a lot of value as a result of the IMF charges, import problems, and credit rating downgrades. No one can forecast how low the currency may sink given the free-float model.