The Pakistani rupee experienced a slight dip against the US dollar on Monday, depreciating by 0.03% in the inter-bank market. The rupee settled at 279.66 at the close of trading, marking a loss of Re0.09 against the greenback. This minor decline is reflective of the ongoing economic challenges in Pakistan, with the local currency continuing to face downward pressure in recent weeks.
In the previous week, the rupee also saw a depreciation against the US dollar, losing Re0.36 or 0.13% in the inter-bank market. At the close of last week, the rupee stood at 279.57, compared to 279.21 a week earlier, according to data from the State Bank of Pakistan (SBP). The currency’s continued depreciation highlights the broader issues affecting the Pakistani economy, including inflationary pressures and the ongoing fiscal challenges that the country is grappling with.
The marginal decline of the rupee comes ahead of an important visit by an International Monetary Fund (IMF) mission to Pakistan. The IMF delegation is set to arrive in Islamabad in early to mid-March to engage in discussions on the first review under Pakistan’s Extended Fund Facility (EFF) program. The outcome of these talks is crucial for the country’s economic stability and its relationship with the international lender, which could potentially affect investor confidence and the value of the rupee.
Internationally, the US dollar held steady at 149.36 yen after a 2% drop last week, with the dollar facing significant challenges in global markets. The US dollar index dipped 0.3% to 106.210, reflecting losses against the euro, sterling, and Swiss franc. These fluctuations in the global dollar index are adding to the uncertainty surrounding the value of the rupee, which is heavily influenced by global currency dynamics.
Economic concerns in the US are also contributing to a volatile global currency market. Data released on Friday revealed that US business activity nearly came to a halt in February, primarily due to growing fears over potential tariffs on imports and cuts in federal spending. Furthermore, consumer sentiment in the US dropped more than expected, hitting a 15-month low, while inflation expectations surged. These economic indicators are adding to the uncertainty surrounding the global financial landscape, further impacting the value of the US dollar and its relation to other currencies like the Pakistani rupee.
In addition to the international developments, oil prices, a key determinant of currency parity, also saw a decline on Monday. Brent crude futures were down by 1 cent, or 0.01%, at $74.42 per barrel, while US West Texas Intermediate (WTI) crude futures fell by 12 cents, or 0.2%, to $70.28 per barrel. The drop in oil prices extends losses from the previous week, largely driven by the potential resumption of oil exports from Kurdistan’s oilfields and investor caution ahead of ongoing negotiations to resolve the Russia-Ukraine conflict. These shifts in oil prices, a significant factor for Pakistan’s currency movements, suggest that the rupee may continue to face pressure in the near future.
In the open market, the rupee also showed signs of weakness against the US dollar, losing 11 paise for buying and 3 paise for selling. The open market closed at 279.02 for buying and 281.20 for selling. Similarly, against the euro, the rupee lost 35 paise for buying and 44 paise for selling, closing at 292.43 and 295.53, respectively. The rupee also lost ground against the UAE Dirham and the Saudi Riyal, with slight declines in both buying and selling rates.
As the Pakistani rupee continues to experience pressure against the US dollar, the coming weeks will be crucial in determining whether the currency can stabilize or if further depreciation is inevitable. The upcoming IMF review and ongoing international developments will likely play a key role in shaping the outlook for Pakistan’s currency and its overall economic trajectory.