KARACHI: Pakistan’s rupee maintained its gaining streak against the US dollar in the interbank market, appreciating Rs2.24 or nearly 1% in the opening hours of trading on Friday.
The local currency was trading at Rs219.7 per dollar at 10am, an appreciation of 0.98 per cent from yesterday’s close of Rs221.94, according to the Forex Association of Pakistan (FAP).
The rupee has recovered by Rs20.77 or 7.41pc in the last 10 sessions after falling close to an all-time low of Rs239.94 on Sept 22.
The rupee, which had fallen close to an all-time low of Rs239.71 on Sept 22, has been recovering since then. It has gained Rs15.77 or 6.58pc in the last nine sessions.
The recent appreciation run is driven by a decline in speculative activity in the currency market, alongside expectation of central bank action against financial institutions involved in currency manipulation.
Moreover, Moody’s Investors Service (Moody’s) on Thursday downgraded the government of Pakistan’s local and foreign currency issuer and senior unsecured debt ratings to Caa1 from B3 after seven years.
Moody’s has also lowered the senior unsecured MTN program’s rating from (P) B3 to (P) Caa1. The prognosis is still gloomy.
In the wake of the disastrous floods that have struck the nation since June 2022, the decision to lower the ratings to Caa1 is motivated by increased government liquidity, external vulnerability risks, and higher debt sustainability risks.
The floods have significantly increased the requirement for social spending while also making Pakistan’s liquidity and external credit problems worse. Government revenue has also been negatively impacted.
According to the rating agency, Pakistan’s long-standing credit weakness of extremely weak debt affordability would continue for the foreseeable future.
