PKR Experiences Intraday Losses Against USD Despite China’s Loan Rollover

During intraday trade today, the Pakistani rupee (PKR) experienced a reversal of gains against the US Dollar, leading to losses. The interbank rate of the rupee initially dropped by around Rs. 1, reaching 284.75 by 11 AM, and then later recovered back to the 283 level by 1:25 PM, where it remained. At the close of the market, the PKR had depreciated by 0.05 percent, closing at 283.79 after experiencing a loss of 13 paisas during intraday trade.

Despite Finance Minister Ishaq Dar confirming that China had rolled over a $2 billion loan to Pakistan for another year, the rupee still experienced losses today. Since January 2023, the rupee has decreased by almost Rs. 52. Today’s exchange rate movements indicate that the PKR has lost some ground, experiencing a drop of 13 paisas.

As of March 24th, the foreign currency reserves held by the State Bank of Pakistan (SBP) were recorded at $4.244 billion, which is down by $354 million compared to the figure of $4.599 billion recorded on March 17th. Money changers say that the market players’ loss of faith in the South Asian economy’s current yield-hunting framework, along with a lack of hope for the near-term business outlook, has led to today’s drop.

Additionally, political instability and the use of state institutions to derail elections have not been well received by investors. In today’s interbank currency market, the PKR was bearish against most of the other major currencies, experiencing losses against the Saudi Riyal (SAR), UAE Dirham (AED), Canadian Dollar (CAD), Pound Sterling (GBP), and Euro (EUR), but gaining three paisas against the Australian Dollar (AUD).