Weekly review: Rupee devalued by 4.9 percent against US dollar
In the interbank market, the US dollar closed at Rs155.85.
KARACHI (Dunya News) – Pakistani rupee has depreciated by 4.9 percent against the US dollar in the outgoing week as the greenback gained Rs7.25 and touched another historical high.
In the interbank market, the US dollar closed at Rs155.85, which in consequence raised Pakistan’s external debts by Rs725 billion.
In the open market, the US dollar closed at Rs157.50, which in turn increased prices of goods, and hardships for the general public.
Besides, a massive increase in the value [domestic] of gold have been seen in the outgoing week, with an increase of Rs4,200, reaching an all time high of Rs75,900 per tola.
The yellow metal saw the significant increase in prices due to the increase in the value of gold in the international market, coupled with an increase in the value of the dollar.
Gold prices retreated on Friday as upbeat U.S. retail sales somewhat eased fears that the economy was slowing down in the second quarter.
Spot gold dipped 0.2% to $1,339.49 per ounce as of 1:55 p.m. EDT (1755 GMT). Prices rose to a high of $1,358.04, last touched on April 11, 2018.
U.S. gold futures settled 0.1% higher to $1,344.50 per ounce.
“Because of growing fears of a recession every participant is wondering is it time when gold is going to break out of this range, and trade substantially higher,” said Daniel Ghali, commodity strategist at TD Securities.
“At the same time expectations of a Fed cut are growing. Gold obviously performs well in that environment.”
Robust U.S. retail sales in May suggested a pickup in consumer spending that could ease fears the economy was slowing down sharply in the second quarter. The data has “dispelled the need for an immediate Fed cut. The market is just paring back its expectations a little bit,” Ghali added.
Recent soft U.S. economic readings have boosted expectations of a U.S. Federal Reserve interest rate cut. Policymakers are scheduled to meet June 18-19, with financial markets pricing in at least two rate cuts by year-end.
In addition to weighing on the dollar, lower interest rates also cut the opportunity cost of holding non-yielding bullion.
A China-U.S. trade war has threatened to escalate, potentially pushing the global economy into recession.
Trade tensions have also spurred concerns about China’s economy, with industrial output growth unexpectedly slowing to a more than 17-year low and investment cooling.
“We are very sensitive right now to economic growth forecasts,” said David Meger, director of metals trading at High Ridge Futures, adding that the pullback in bullion was largely technical as prices had closed in on $1,360, an area of resistance for the gold market.
The ratio between industrial metal copper, often viewed as an indicator of economic growth, and safe-haven spot gold jumped to its highest since late-2016.
Among other precious metals, spot silver fell 0.6% to $14.81 per ounce, while platinum dipped 1.2% to $798.23.
Palladium gained 1.3% to $1,463.52 per ounce, on track for its best week since April 2018. Prices were up for a seventh straight daily session.
With input from Reuters
