KARACHI:
The possible escalation of the Middle East crisis pushed the rupee to a near four-week low of Rs 279.29 against the US dollar in the interbank market on Tuesday and sent gold to a fresh record high of Rs 249,700 per tola (11.66 grams).
According to State Bank of Pakistan (SBP) data, the rupee depreciated further by 0.06% or Rs 0.17 to close at a 26-day low of Rs 279.29 against the dollar. The currency has fallen cumulatively by 0.45%, or Rs 1.26, in the past three weeks compared to its five-and-a-half-month high of Rs 277.03/$ reached at the end of March 2024.
The crisis in the Middle East has triggered a boom in international crude oil prices, which is gradually piling pressure on the rupee. Speaking to The Express Tribune, Ismail Iqbal Securities Deputy Head of Research Saad Hanif said the government revised the prices of petroleum products twice in the last three weeks, arguing that it was passing on the rise in global oil prices to end consumers.
Hanif, however, did not pay much attention to the daily nominal decline in the rupee-dollar rate and described it as a routine move like the appreciation of the rupee in recent days.
The rupee will remain stable around Rs 280/$ in the short term. The expected receipt of the International Monetary Fund (IMF) tranche of $1.1 billion later this month should support the currency and keep it strengthened near current levels.
It may depreciate to a maximum of Rs 285/$ by the end of June 2024 in case the gradual downtrend for the exchange rate continues. Later, the IMF terms for a fresh loan program and the budget announcement for the next financial year would give a clear direction to the rupee from July onwards, Hanif pointed out.
The Association of Exchange Companies of Pakistan said the local currency fell by Rs 0.02 on a daily basis to close at Rs 279.68/$ in the open market.
Gold shines
The All Pakistan Saraf Gems and Jewelers Association on Tuesday revised the price of gold up by Rs 2,400 to an all-time high of Rs 249,700 per tola (11.66 grams) in line with the global trend.
The association said the precious metal rose $20 to hit a record high of $2,391 an ounce (31.10 grams) on the international market.
Global commentators linked the rise in the price of gold to escalating geopolitical tensions as investors shifted their savings to safe-haven gold to avoid the impact of the devaluation of their respective currencies.
Any relaxation and resolution of the crisis will lead to a rapid turnaround in the gold market, which has soared around $400 an ounce over the past five weeks to current record levels.
Published in The Express Tribune, April 17u2024.
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