Islamabad: The Pakistani rupee’s thirteen-sessions winning streak against the US dollar came to an end on Wednesday, as the PKR posted a marginal loss in the interbank market.
At the end of today’s session, the local currency depreciated by 0.04% or Rs0.09 to close at Rs217.88 against the greenback in the interbank.
— SBP (@StateBank_Pak) October 12, 2022
During the thirteen continuous winning sessions, the PKR jumped from Rs239.71 on September 22 to Rs217.73 on October 11 against the USD.
The bullish trend in PKR’s value had been attributed to Ishaq Dar’s return, an advocate of a strong currency. Since his arrival, the PKR had been flying against the US dollar before falling today for the first time.
A few other key developments also took place in the meantime that also affected the rupee’s performance against the US dollar.
Last week Moody’s downgraded Pakistan’s sovereign credit rating by one notch to Caa1 from B3, citing increased government liquidity and external vulnerability risks, following the devastating floods that hit the country.
Similarly, on Tuesday, Moody’s Investors Service also downgraded the long-term deposit ratings of five Pakistani banks from B3 to Caa1.
According to a statement issued by the rating agency, it also downgraded the five banks’ long-term foreign currency Counterparty Risk Ratings (CRRs) to Caa1 from B3.
The statement said that the outlook on all banks’ deposit ratings remains negative.
In its statement, Moody’s said that today’s rating actions reflected the Government of Pakistan’s reduced capacity to support the banks; the high credit linkages between the banks’ balance sheets and sovereign credit risk; and the lowering of Pakistan’s foreign currency ceiling to Caa1, which has affected the foreign currency CRRs of all rated banks.