Open market Today: Forex Association of Pakistan data showed the Pakistani rupee surpassed the 205 thresholds for the first time in its history on Tuesday after shedding Rs4 in the open market.
Meanwhile, it fell to an intraday low of Rs202.75 in the interbank Open market due to increasing demand for the greenback as a result of import payments.
Demand is higher due to import demand which has increased because of oil payments.
As the demand for the rupee is higher than its supply because of an increase in import demand due to oil payments, the local currency continued to decline.
State Bank of Pakistan (SBP) reports the rupee closed at Rs200.06 on Monday.
Tahir Abbas, Head of Research at Arif Habib Limited, told Geo.tv that oil payments are pending, as well as rising international oil prices.
A mammoth import bill widened the current account deficit, the analyst said.
Moreover, the Open market is keeping a close eye on the developments regarding the International Monetary Fund (IMF) program, which is expected to be revived after the budget announcement as the government is taking all possible steps to meet IMF conditions.
On May 26, when the IMF loan program was more uncertain than it is now, the rupee had breached the 202 mark. Recently, the government has hiked the price of petroleum products by Rs60 per liter while removing subsidies – a major demand of the money lender.
Investors expect IMF conditions of fiscal consolidation to dominate this week leading up to the unveiling of the federal budget for 2022-23 on June 10 (Friday).
An increase in fiscal-year-end dollar demand from importers and the corporate sector will increase rupee pressure.
China’s $2.7 billion deposit placement, meanwhile, has failed to entice traders as they do not see it as useful for fiscal or external support.