Rupee goes south as dollar makes another Rs1.20 gain on Thursday morning

IMF deal and financial assistance from friendly nations haven’t checked the slide

KARACHI (Dunya News) – The rupee continued depreciating against the US dollar which gained Rs1.20 against the local currency in early interbank trading on Thursday morning amid high demand despite the rising foreign reserves after Pakistan sealed the deal with the International Monetary Fund (IMF).

By the time this report was filed, the dollar was traded for Rs285 against the previous day’s closing of Rs283.80.

Interbank closing #ExchangeRate for today https://t.co/0BIZQ7D7oW#SBPExchangeRate pic.twitter.com/2RrCNnIszx

— SBP (@StateBank_Pak) July 19, 2023

As far as the international money markets are concerned, the Australian dollar surged on Thursday after the country's employment data came in way above expectations, while the yuan marched higher after China moved to stem its currency's decline by relaxing a cross-border financing rule.

 

Data out on Thursday showed that Australia's employment handily beat expectations for a second straight month in June as net employment rose by 32,600 in June from May, exceeding market forecasts for an increase of 15,000.

That pushed the Aussie up and it spiked more than 0.9 per cent to an intra-day high of $0.6834, taking the New Zealand dollar along with it.

The kiwi gained 0.57pc to $0.6299, with both Antipodean currencies on track to reverse four straight sessions of losses.

In Asia, China left its lending benchmarks unchanged on Thursday, as expected, though its central bank and foreign exchange regulator said they had raised the cross-border macro prudential adjustment ratio for corporates and financial institutions.

The latter move was meant to make it easier for domestic firms to raise funds from overseas markets, which comes at a time when the Chinese yuan is facing downward pressure as the country's economic recovery falters.

Allowing more capital inflows could alleviate the pressure on the currency.

The yuan jumped in the onshore and offshore markets following the move, with both strengthening more than 0.5pc against the US dollar.

The offshore yuan last bought 7.1901 per dollar, while the onshore yuan strengthened past 7.18 per dollar to a session-high of 7.1620.

The hike indicated the People's Bank of China's policy guidance to "defend the (yuan) and curb the excessive forex volatility alongside the strong CNY fixing bias", said Ken Cheung, chief Asian FX strategist at Mizuho Bank.

In the broader currency market, sterling was nursing deep losses after a sharp fall in the previous session following Britain's inflation data, which undershot market expectations.

The British pound was last 0.15pc higher at $1.2958, after having slid more than 0.7pc on Wednesday.

That inflation reading pulled back market expectations of further aggressive rate hikes from the Bank of England (BoE), with the prospect of Britain's rates rising above 6pc now likely off the table.

Traders had at one point expected interest rates to rise as high as 6.5pc.

The euro rose 0.24pc to $1.1227, as investors looked to next week's European Central Bank (ECB) policy meeting for further clarity on the rate outlook.

ECB policymakers have in recent days taken a more dovish tone, with governing council member Yannis Stournaras the latest to guide that future rate rises past July's likely 25 basis points increase remains up in the air.

The US dollar index last stood at 100.03, regaining some lost ground after last week's more than 2pc fall in a knee-jerk reaction to US inflation data that came in cooler than expected.

The Japanese yen rose 0.3pc to 139.23 per dollar.