Pakistani Rupee likely to stay stable to dollar amid Russian oil arrival

Pakistani Rupee likely to stay stable to dollar amid Russian oil arrival

The Pakistani Rupee (PKR) is expected to maintain stability against the US Dollar in the coming week, driven by the anticipated arrival of Russian oil. This development raises hopes of reducing the country’s oil import bill, leading to positive market sentiment.

Throughout the week commencing May 22, 2023, the PKR exhibited a combination of stability and fluctuations against the USD. Despite brief periods of depreciation, the overall trend showed appreciation. Factors such as a current account surplus from reduced import payments and reassurances from the finance minister regarding ample reserves contributed to this positive performance.

The PKR experienced volatility influenced by multiple factors, including import and corporate payments, as well as external dynamics like oil imports and market confidence. Starting the week at 286.56 against the USD, the exchange rate initially declined but later strengthened, concluding the week at a closing rate of PKR 285.15.

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On May 22, 2023, the local currency closed at PKR 286.56, reflecting a decline of 74 paisas compared to its closing rate on March 19, 2023. Increased demand for the USD, driven by import and corporate payments, was attributed to this depreciation. Furthermore, political and economic uncertainties added pressure to the rupee.

The trend of depreciation continued on May 23, 2023, with the exchange rate decreasing by 59 paisas to close at PKR 287.15. Ongoing demand for the USD, primarily due to import and corporate payments, contributed to the devaluation of the rupee.

A slight reversal occurred on May 24, 2023, as the Pakistani Rupee gained 2 paisas in value, resulting in a closing rate of PKR 287.13 against the dollar. However, the persistent demand for the USD driven by import and corporate payments continued to impact the rupee negatively.

May 25, 2023 marked a significant turnaround for the Pakistani Rupee, closing at PKR 285.74 and gaining an impressive PKR 1.39. This rebound can be attributed to positive reports indicating the arrival of low-cost Russian oil in Pakistan by the first week of June 2023. The anticipation of reduced oil import costs played a crucial role in strengthening the local currency.

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Closing the week on May 26, 2023, the rupee appreciated further, with the exchange rate closing at PKR 285.15. Currency analysts attribute this appreciation to a current account surplus resulting from a decline in import payments. Additionally, the finance minister’s assurance of sufficient reserves to meet external debt repayment until June 30, 2023, boosted market confidence.

The Pakistani Rupee experienced fluctuations throughout the week due to various factors, including import and corporate payments, oil imports, and market confidence. The currency’s performance remains sensitive to changing economic and political conditions. However, the anticipated arrival of Russian oil and positive market indicators have provided stability and hope for reduced oil import costs, contributing to the stability of the PKR against the USD.

READ MORE: PKR may remain volatile against dollar for week starting May 22, 2023