During intraday trading today, the Pakistani Rupee (PKR) suffered losses vs the US Dollar (USD), reversing gains.
It dropped 39 paisas against the dollar, or 0.17 percent, to settle at Rs. 223.81. The local currency was trading at 224.72 versus the US dollar at its intraday low.
The local currency commenced trading at 224 on the open market that morning with a negative starting bias against the US dollar. The dollar strengthened against the rupee at lunchtime. The local currency was in the negative after 1 PM and held steady at 223-224 vs the top foreign currency until the interbank closure.
Despite a sharp reduction in Pakistan’s default risk, the rupee registered losses versus the US dollar today.
The nation’s benchmark 5-year CDS had a dramatic decline on November 22 of a staggering 5,224 basis points to 71.64 percent. The instrument has lost more than 52 percentage points in a single day and demonstrates that, at a price level of more than 70 percent, which is still a staggering amount, investors are once again partially ready to accept Pakistan’s default risk.
As the nation prepares for forthcoming political and economical events, money changers see today’s PKR decline as a warning of more tumultuous patterns to come in the days to come.
It’s interesting to note that Pakistan is currently more susceptible to currency crises due to rising inflation, constrained fiscal space, negative real interest rates, a deteriorating balance of payments, and less FX reserve cover.
