In the inter-bank market at around 2:20 pm, the rupee faced further weakening against the US dollar, hovering at 283.90, marking a decline of Re0.86. This continued a trend of sustained losses for the rupee in the past few sessions. On Tuesday, the rupee had depreciated by 1.34%, settling at 283.04 against the US dollar.
The International Monetary Fund (IMF) has taken notice of Pakistans management of the exchange rate. This has raised concerns emphasizing the significance of allowing the market to determine the exchange rate. The reliance on administrative measures to handle imports since May 2022 and the tightly controlled exchange rate since September 2022 have had adverse effects on Pakistan’s growth and external pressures. The controlled exchange rate has discouraged inflows, especially remittances.
To address these economic challenges, the Pakistani government has committed to implementing measures aimed at controlling non-priority spending. This includes measures in the energy sector to contain energy subsidies, managing the public wage bill, and controlling pensions.
In the global context, the US dollar is being closely monitored by traders, as they assess the US rate outlook. The dollar managed to rise slightly after a mixed retail sales report in June. While sales growth missed forecasts, consumers showed resilience by maintaining or boosting spending in other areas, indicating a solid growth path for the economy.
The US dollar index, which calculates how the dollar is doing compared to a range of currencies stabilized at 99.943 during trading, in Asia after recovering from its point in 15 months during the previous session.
As for oil prices, they initially opened higher in Asian trade but later edged down as concerns about US demand were weighed against China’s commitment to supporting economic growth. Additionally, tighter Russian supply and declining US inventories continue to impact the global oil market.