Volatility resumed at the foreign exchange market as the rupee depreciated Rs1.39 against the US dollar in the inter-bank market to Rs171.9 on Tuesday during intra-day trading.
Earlier, the local currency dipped to an all time low of Rs175.27 against the greenback owing to deadlock between Pakistan and the International Monetary Fund (IMF) over resumption of $6 billion bailout package. However, $3 billion in financial assistance from Saudi Arabia coupled with oil facility on deferred payments worth $1.2 billion arrested the slide and propelled the local currency.
Alpha Beta Core CEO Khurram Schehzad stated that rupee has been declining for the past two sessions.
According to him, uncertainty over the revival of IMF programme and lack of clarity on this front were fuelling the fall.
Besides, skyrocketing inflation means that the country would enhance import of essential goods to stabilise the prices in local market therefore dollar is in high demand, he said. Moreover, anticipation of increase in imported inflation has sparked panic buying of the greenback.
“Furthermore, the State Bank of Pakistan has not made any announcement regarding the receipt of $3 billion from Saudi Arabia which is dampening the market sentiment,” he said. “Central bank might have received the amount and it should update the citizens about the development as it will strengthen the market sentiment.”
Arif Habib Commodities Managing Director and CEO Ahsan Mehanti stated that compliance on few conditions laid down by IMF was still pending and delay in approval of next tranche was driving rupee depreciation.
He stated that matters pertaining to autonomy of the central bank, increase in petroleum development levy and power tariff rationalisation were awaiting conclusion.
Mehanti was of the view that approval and release of next tranche worth $1 billion would arrest rupee’s slide and steer recovery of local currency against the greenback.