Pakistan rupee slumps to a record low against US dollar

Official exchange rate recorded at Rs299 during ongoing trading

LAHORE (Web Desk/Reuters) – The rupee slid to the record-low level against the US dollar in interbank trading on Tuesday after touching the Rs299 mark at one point as the local currency lost Rs1.87 against the greenback

Previously, it was earlier this year on May 11 when the dollar had fetched Rs298.93 in official exchange rate.

The reason behind this depreciation is the easing in import restrictions that has lifted demand for the dollar after months of contraction which also ensured that Pakistan was able to ensure a huge reduction trade deficit during the last fiscal year.

Read more: Pakistan sees 43pc reduction in trade deficit in 2022-23

On the other hand, the rupee was performing even worse in the open market with the dollar available for Rs312, representing a Rs8 loss during a single session.

The previous session on Monday saw the rupee shedding Rs1.35, or 0.45 per cent of its value, in the official exchange rate.

Interbank closing #ExchangeRate for today https://t.co/06ebUn3yum#SBPExchangeRate pic.twitter.com/A8hyc0EJDw

— SBP (@StateBank_Pak) August 21, 2023

Meanwhile, the latest losses come on a day when the dollar is down against major currencies in global money markets with the greenback easing from recent 10-weak peaks on Tuesday as global risk appetite, hurt by a jump in US government bond yields and a weakening Chinese economy, staged a rebound.

The US dollar index - which measures the currency against six developed-market counterparts, was down 0.25pc at 103.06, below Friday's 10-week highs at 103.68.

Still, it is up just over 1pc so far in August.

The dollar slipped 0.3pc to 145.79 yen, pulling away from last month's nine-month peaks after Bank of Japan Governor Kazuo Ueda met with the prime minister, although he said exchange-rate volatility was not discussed.

The greenback also came under pressure against European currencies as London trade got under way as the euro firmed a third of a percent to $1.0928, sterling was also up roughly 0.3pc to $1.2798.

China's battered yuan found a respite and briefly popped to a one-week high versus the dollar as Beijing's efforts to slow its decline gained some traction although pressure from rapidly rising US yields and worries about the economy continue to weigh on the currency.

The Chinese central bank set the yuan mid-point at 7.1992 per dollar on Tuesday, 1105 pips firmer than Reuters' estimate, attempting to keep a floor under the currency following its slide to a 9-1/2-month low of 7.349 in offshore trading last week.

Meanwhile, the offshore yuan was a touch softer at around 7.30 per dollar, having firmed firming as much as 0.25% after the fixing.

The Australian dollar was 0.4pc firmer at $0.6441 as global risk appetite recovered. It had dropped to a 9-1/2-month low of $0.6365 on Thursday.

"It will likely take a big Chinese stimulus package focused on commodity-intensive infrastructure spending to turn around the downtrend in AUD/USD," Kristina Clifton, senior currency strategist at Commonwealth Bank of Australia, wrote in a note.