Pakistani currency on Wednesday hit a new four-week low at Rs278.40 against the US dollar in the inter-bank market, while gold surged to a fresh record high at Rs251,900 per tola (11.66 grams) in line with the global trend.
According to State Bank of Pakistan’s (SBP) data, the rupee further dropped Rs0.11 on a day-on-day basis, reaching a 28-day low at the close of market.
With this, the currency has cumulatively lost 0.49%, or Rs1.37, in the past three weeks compared to the five-and-a-half-month high close at Rs277.03/$ in late March 2024.
The currency has maintained its downturn amid a seasonal drop in supply of the foreign currency against its demand. The inflow of foreign currency on account of workers’ remittances is believed to be slowing down post-Ramazan and Eid celebrations last week.
Overseas Pakistanis usually send higher remittances during Ramazan every year, but inflows take a dip after Eid.
Besides, the uptrend in international crude prices in the wake of likely deepening of the Middle Eastern crisis is increasing demand for the greenback for oil imports, mounting pressure on the rupee. Pakistan meets almost 70% of its energy demand through imports, making heavy payments in foreign currency.
In addition, the government has begun negotiations for a new International Monetary Fund (IMF) loan programme. Financial experts believe the rupee may remain under pressure until a loan package is agreed and finalised by the end of June 2024.
An expert anticipated the other day that the currency may depreciate to Rs285/$ by the close of June if it fails to stabilise after the IMF releases its last tranche of $1.1 billion later this month under a $3 billion standby arrangement.
Gold at new peak
The All Pakistan Saraf Gems and Jewellers Association reported that gold rose by another Rs2,200 to a new all-time high at Rs251,900 per tola. The precious metal has cumulatively gained Rs17,100 in the past 17 days.
In the global market too, the bullion price hit a record high at $2,412 per ounce (31.10 grams), rising $21 for the day, the association said.
Global investors have continued to park their savings in gold – a safe-haven asset – to avoid the impact of likely devaluation of their respective currencies in the wake of Israeli aggression against the Palestinian people in the Middle East.
Published in The Express Tribune, April 18th, 2024.
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