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IMF deal delay sends PKR into a tailspin

PKR trades 1.11 rupees higher in interbank
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March 09, 2023 (MLN): The delay in the IMF deal has once again thrown the currency markets into a tailspin as the Pakistani rupee (PKR) depreciated by 3.2 rupees against the greenback in today's interbank session as the currency settled the trade at PKR 282.3 per USD compared to yesterday's closing of PKR 279.12 per USD.

Throughout today’s session, the local unit traded in a band of 4.25 rupees, showing an intraday high bid of 283 and low offer of 279.25 while in the open market, PKR was traded at 281/285.5 per USD.

Experts are of the view that until the accord is signed with the lender and payments are received from other countries, uncertainty will continue to persist in the market.

The local currency has been declining in value recently due to delays in reaching a deal between Pakistan and the IMF. Negotiations between the two parties have been ongoing since early last month.

One of the actions that the IMF wants Pakistan to complete to clear its 9th review is to move to a market-based currency exchange rate regime.

Upon approval of this review by the IMF board, a funding tranche of over $1 billion would be released, which has been postponed since the end of last year.

Meanwhile, the currency lost 4.5 rupees to the Pound Sterling as the day's closing quote stood at PKR 334.44 per GBP, while the previous session closed at PKR 329.98 per GBP.

Similarly, PKR's value weakened by 3.7 rupees against EUR which closed at PKR 297.87 at the interbank today.

In FYTD, PKR lost 77.45 rupees or 27.44%, while it plummeted by 55.86 rupees or 19.79% against the USD in CYTD. On the other hand, within the last seven sessions, the local unit moved up by 0.99%, as per data compiled by Mettis Global.

On another note, within the money market, the State Bank of Pakistan (SBP) on Thursday conducted an Open Market Operation (OMO), in which it injected a total of Rs677.95 billion into the market at a 20.06% rate of return for a 1-day tenure.

The overnight repo rate towards the close of the session was 19.75%/20%, whereas the 1-week rate was 19.95%/20.05%.

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Posted on: 2023-03-09T16:49:46+05:00