In Tuesday’s trade, the rupee started to fall in the interbank market, losing 0.37% of its value against the US dollar.
At around 2:00 pm, the rupee was being quoted at 217.49, a depreciation of Re0.82 or 0.37% against the greenback, during intra-day trading. The rupee had earlier gained in value in the opening hours of trading.
As political commotion overtook the market on Monday, the Pakistani rupee fell 0.93% or Rs2.01 to end the day at 216.66 against the US dollar.
Additionally, the State Bank of Pakistan’s Monetary Policy Committee (MPC) agreed to keep the policy rate at 15%, in line with market forecasts, citing some encouraging developments on both the domestic and international fronts.
Read more: Cooling down the economy: SBP keeps the policy rate unchanged at 15pc
“This will positively affect the markets,” said Trust Securities and Brokerage Limited (TSBL) in a note on Tuesday.
The MPC projected that headline inflation may surge to its peak in the first quarter of this fiscal year before declining gradually through the rest of the year.
On the plus side, the conclusion of the impending International Monetary Fund (IMF) review and the increased inflows from friendly nations are expected to help foreign exchange reserves reach about $16 billion during FY23, according to the MPC.
On the other hand, domestic political tensions remain high, adding to market uncertainty. The ongoing “political uncertainty would negatively affect the rupee”, said TSBL.
Read more: Rupee versus Dollar- stocks going up
On Tuesday, market sentiment was dominated by worries about a restricted supply of oil after Saudi Arabia warned that the largest oil producer would reduce output to reverse a recent decrease in oil prices. Oil prices, a crucial factor in determining currency parity, increased as a result.
As Europe deals with issues with its energy supply and broader economic growth, the dollar remained stable on Tuesday on safe-haven flows. The U.S. dollar index remained steady at 108.9 against a basket of currencies, seeking to surpass the two-decade high of 109.29 reached in July.