The rupee on Friday morning which depreciated by a record 8.21 per cent to Rs145 against the dollar in the inter-bank market, regained Rs10 later on during intra-day trading to close at Rs135-136.
The rupee opened at Rs 140 bid and Rs145 offer rate on Friday morning and was trading at a Rs140-142.2 spread in the inter-bank market against the dollar at the time of filing this report.
Meanwhile, later during the day Pak rupee regained its position and was seen trading between Rs135 – Rs136 interbank against the dollar.
Moreover, the rupee was being bought at Rs137 in the kerb market and the currency dealers refused to sell dollars.
Rupee’s 8.21 per cent plunge would surpass the previous record depreciation of 7.5 per cent in the inter-bank market that happened on October 9th, following the government’s announcement it would be approaching the International Monetary Fund (IMF) for a bailout.
The State Bank of Pakistan (SBP) is set to announce the monetary policy today and it is anticipated that the interest rate will be hiked by 100 basis points to 9.5 per cent from the existing 8.5 per cent announced at the end of September.
Due to the latest depreciation of the local currency, the total debt owed by Pakistan has risen to Rs760 billion.
Speaking to Profit, Pak Kuwait Investment Co AVP Research Adnan Sheikh said, “In line with expectations, the dollar continues its three-monthly slide and at this rate, we are on track for Rs160-170 by June next year.
As per my previous prediction in July, the rupee would touch Rs160-70.”
“Inflation, bank interest rates and petrol prices will keep rising beyond market consensus and bank loans are going to bust.
As a pre-emptive measure, 150bps discount rate hike would be taken today. If they only increase 100bps this time, then 150bps is likely in January,” he added.
“Albeit depreciation has taken place gradually, a cumulative slide of 34 per cent from 105 is not a light matter. And things will start going bump in the dark, especially the banking sector which has seen a sharp rise in rates and will continue to see the same.
Banks will not benefit unless rates are stable for at least 3-6 months,” explained Mr Adnan.
“Also, the foreign exchange losses importers will face in this quarter will be unprecedented, as its the highest quartely depreciating having adjusted from Rs123 to Rs133 in October and now to Rs140 in November making this quarter’s move around 13-14 per cent alone,” he said.
This signals that the central bank has decided to let the rupee further depreciate against the dollar in line with International Monetary Fund (IMF) demand and boost exports.
