USD/PKR: Pakistani Rupee Hovering Above 155 Unofficial Soft Peg

Pakistani Rupee continues to hover above the 155 unofficial soft-peg with the US dollar. On the interbank market, Pakistani Rupee was seen quote lower by -0.70%, compared to yesterday’s close, settling at 155.30 against the US dollar.

During early Asia trading hours, Pakistani Rupee was able to recover most of Monday’s losses.

The State Bank of Pakistan (SBP) reported that the Pakistani Rupee was traded at Rs 155.30 against Rs 156.40 in the currency market. On the other hand, the dollar index, which gauges the greenback’s strength against a basket of major currencies, was seen trading lower at 97.80 during London trading hours.

During the 2018 — 2019 periods, Pakistani Rupee has depreciated over 50% against the greenback. The USD/PKR exchange rate has gone from an exchange rate of Rs 106 up to around Rs 155. The Rupee devaluation process was intended to boost exports and fix a sluggish economy.

The country’s central bank efforts to devalue the Rupee didn’t have the intended effect to shrink the trade deficit. While the Pakistani Rupee was significantly devalued, Pakistan’s massive trade deficit didn’t shrink. Contrary to what the theory tells us which states that a lower domestic currency can help boost exports, Pakistan’s economy shows signs of entering into a soft recession.

Anti-government protest that seeks the resignation of Prime Minister Imran Khan has also added negative pressure on the currency exchange rate. The demonstrations continued in the capital city Islamabad and other parts of the country for a third consecutive week.

The benchmark equity index Karachi Stock Exchange KSE-100 Index closed up 0.70% at 38681 during the first trading day of the week. Year-to-day the Pakistan stock exchange market is up 4.36%. The Pakistan 10-year government bond yield gaped higher and closed at 11.586 or 2.35%.

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