The Pakistani rupee lost value versus the US dollar in the interbank market on Thursday, depreciating 0.23% after recording appreciation in the morning. The fall occurs as the US dollar strengthens significantly versus other currencies following last night’s Federal Reserve announcement of yet another sharp interest rate increase.
In intraday trade, the rupee depreciated by Re0.52 versus the US dollar to 221.95 at around 12 o’clock.
The rupee has lost Re0.78 (0.35%), or 221.43, by Wednesday’s close.
The Pakistan Bureau of Statistics (PBS) said on Wednesday that the country’s trade deficit decreased by 26.59% to $11.469 billion during the first four months of the current fiscal year from $15.624 billion during the same time last year.
Positive news for the cash-strapped South Asian economy comes from the decrease in the trade deficit.
Additionally, a Memorandum of Understanding (MoU) on establishing RMB (Chinese currency) clearing arrangements in Pakistan was signed by the State Bank of Pakistan (SBP) and the Peoples Bank of China (PBoC).
Internationally, the dollar gained ground on Thursday after Federal Reserve Chair Jerome Powell hinted that US interest rates will probably rise more quickly than anticipated. This deflated traders’ expectations for a change in stance and shifted attention to Friday’s jobs report.
As was widely predicted, the Fed increased its benchmark funds rate by 75 basis points to 3.75–4%.
The Fed’s statement had clues of future lower raises, which caused the dollar to temporarily decline. However, after Powell’s hawkish assessment of the rate trajectory, the currency recovered.
