KARACHI: After a day’s respite, the Pakistani rupee once again reverted to its downward trend by depreciating 0.17% against the US dollar in the interbank market.
The local unit closed at 223.81 against the greenback falling by Re0.39 compared to Tuesday’s close of 223.42.
In a major development, Nomura Holdings, Japan’s top brokerage and investment bank, has warned that seven countries — Pakistan, Egypt, Romania, Sri Lanka, Turkey, Czech Republic, and Hungary — are now at a high risk of currency crises.
The Japanese bank said that 22 of the 32 countries covered by its in-house “Damocles” warning system have seen their risk rise since its last update in May.
The model crunches 8 key indicators on a country’s foreign exchange reserves, exchange rate, financial health and interest rates to give an overall score.
The absence of a timetable for incoming financing from friendly nations delayed negotiations with International Monetary Fund (IMF), and the country’s increasing risk of failing to service its foreign debt has a negative impact on the market sentiment.
Though the current account gap has shrunk, the exports and remittances have suffered significantly. The inflows have slowed, and traders are anxiously waiting for the World Bank to send the essential relief funding.
In upcoming weeks, currency dealers anticipate that the rupee will be under pressure but range-bound. The future direction of the local unit will depend on some indication of political stability and any reports of incoming inflows from friendly countries.
Internationally, the US dollar was steady today as investors tempered their risk appetites ahead of the release of minutes of the Federal Reserve’s policy meeting that could offer clues on the outlook for inflation and interest rates.
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