Pakistani rupee plunges to all-time low against US dollar

The Pakistani rupee on Monday plunged to an all-time low of 215 against the US dollar in the interbank trade, according to the Exchange Companies Association of Pakistan (ECAP) as the ruling PML-N’s thrashing in the Punjab by-elections has triggered political uncertainty in the country, The News reported.

The rupee depreciated against the greenback by Rs4.3 during the intraday trade on Monday. It remains to be seen where the local currency will settle at the end of the day’s trading. The dollar is currently being sold for Rs215.25 in the interbank market, bringing the local currency to an all-time low.

On June 21, the rupee had closed at a record low of 211.48 against the greenback and since then the currency has remained volatile.

Meanwhile, the benchmark KSE-100 index of the Pakistan Stock Exchange (PSX) is also in the red with the bears dominating the proceedings of the bourse.

The Pakistan stocks lost 708 points on Monday as uncertainty resulted in a bloodbath session. The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) ended 41,367 points from previous day’s closing of 42,075 points, showing a decline of 708 points.

Pakistan-Kuwait Investment Company Head of Research Samiullah Tariq cited import payment pressure and political uncertainty as the reason for the rupee’s hit, The News reported.

The analyst said that Sunday’s by-election results gave clarity but the market is awaiting a strategy going forward.

“The market is looking for a direction, therefore investors are anticipating what would be the way forward. Will the coalition government announce early elections or not?” said Tariq.

Analysts at Topline Securities commented that Pakistan equities commenced the week on a bearish note on the backdrop of increasing noise on the political front after the surprise clean sweep victory of PTI (Opposition party to the ruling coalition) in Bi-Election held in the biggest province of the country.

Meanwhile, analysts at Arif Habib Limited said that the benchmark KSE-100 index witnessed a bloodbath session today over prevailing political uncertainty in the country.

The market opened in the negative zone and remained under pressure throughout the day as investors opted for panic selling due to rupee devaluation against USD.

The main board volumes remained dull although hefty volumes were observed in the 3rd tier stocks.

Sectors contributing to the performance include Banks (-127.6 points), Cement (-106.6 points), Fertilizer (-106.2 points), E&P (-69.1 points) and Technology (-67.9 points).

Volumes increased from 140.1 million shares to 151.4 million shares (+8.0 per cent DoD). Average traded value decreased by 18.9 per cent to reach US$ 20.3 million as against $25.0 million. Stocks that contributed significantly to the volumes are WTL, KEL, TPLP, PRL and CLVLR.

Indian rupee: The week opened for Indian rupee on a weak note against the US dollar with the latter hardening against it.

The rupee hit Rs 79.99 during the intra-day trade and closed at Rs 79.97 against the dollar.

“USD-INR spot closed 9 paise higher 79.97, a whisker away from all time high near 79.99. Today rupee brushed aside all positive cues by way of strong equities and weaker dollar index. Strong demand for oil marketing companies kept the pressure on. Over the near term, bias continues to be upward. We expect the pair to trade within a range of 79.60 and 80.30 on spot,” Anindya Banerjee, Vice President, Currency Derivatives & Interest Rate Derivatives at Kotak Securities Ltd, said.

Amid depreciation of the rupee against dollar, Finance Minister Nirmala Sitharaman said in the Lok Sabha on Monday that global factors such as the Russia-Ukraine conflict, soaring crude oil prices and tightening of the global financial conditions, were the major reasons for the weakening of the Indian rupee against the US dollar.

She added that another reason was that the foreign portfolio investors have withdrawn about $14 billion from the Indian equity.

Sitharaman said that currencies such as the British pound, the Japanese yen and the Euro have weakened more than the Indian rupee against the US dollar and therefore, the Indian rupee has strengthened against these currencies in 2022.

The depreciation of a currency is likely to enhance export competitiveness which in turn impacts the economy positively. The depreciation also impacts the imports by making them more costly.

The Reserve Bank of India (RBI) regularly monitors the foreign exchange market and intervenes in situations of excess volatility. The Reserve Bank of India has raised interest rates in the recent months that increase the attractiveness of holding Indian rupees for residents and non-residents.

She said that the recent measures taken by RBI include the Exemption of Incremental Foreign Currency Non-Resident (Bank) and Non-Resident (External) Rupee (NRE) deposits from the maintenance of CRR and SLR up to November 4, 2022.