Rupee Falls Amid Political Uncertainty in Markets

The Pakistani rupee initially gained ground against the US Dollar in today’s intraday trading, opening at 283.5 in the interbank market. At 12 PM, it exhibited a bullish trend, reaching a peak of 283.275 after strengthening by approximately Rs. 4 against the US Dollar.

Subsequently, the rupee’s value declined to the 287 level between 1:30 PM and 2:30 PM, where it remained stable. In the open market, documented rates across various currency counters saw an increase within the 293-296 range.

By the close of trading, the PKR experienced a depreciation of 0.05 percent, concluding at 287.6 against the dollar, after losing 14 paisas throughout the day.

The informal exchange rate initially ranged from 297 to 301. Cash rates per dollar in the Hundi market fluctuated between 297 and 304, with some sources (not officially documented) reporting rates as high as 305.

Market analysts anticipate heightened volatility and a prevailing bearish sentiment due to political uncertainty leading up to the General Elections scheduled for October.

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Overall, the Pakistani rupee has declined by nearly Rs. 65 since January 2023. Since April 2022, it has experienced a drop of over Rs. 115 against the US Dollar. Based on the day’s exchange rate fluctuations, the PKR gained 45 paisas against the dollar today.

In a significant development, the State Bank of Pakistan (SBP) has established a remuneration rate for the Special Cash Reserve Account (US$), using the July CME 1-month Term Secured Overnight Financing Rate (SOFR) minus 1 percent service charges.

The circular issued by the central bank states, “On discontinuation of US Dollar LIBOR, it has been decided that from the month of August 2023, the rate of remuneration on Special Cash Reserve Account (US$) shall be calculated as CME 1-month Term Secured Overnight Financing Rate (SOFR) published on the last working day of the previous month minus 1% service charges.”

In a separate communication, the central bank notified authorized foreign exchange dealers that the rate of remuneration for the Special Cash Reserve Account (US$) maintained with the SBP would be set at 4.32 percent for August 2023.

In today’s interbank currency market, the PKR experienced gains against some major currencies, appreciating by 17 paisas against the British Pound (GBP) and 37 paisas against the Australian Dollar (AUD). Conversely, it weakened against other currencies, including a loss of three paisas against the Saudi Riyal (SAR), three paisas against the UAE Dirham (AED), 18 paisas against the Canadian Dollar (CAD), and 94 paisas against the Euro (EUR).