October 29, 2021 (MLN): The upsurge of the rupee against the US dollar continued on Friday’s interbank session as the currency closed the trade at PKR 171.65 per USD, appreciating by 61 paisa on the back of positive economic developments.
On Thursday, the local unit had closed at PKR 172.26 per USD.
The strengthening of PKR against the USD is going on after the announcement of Saudi support of $4.2billion to subdue the pressure on the trade balance and increase foreign currency reserves.
Moreover, the ease in pressure is also a reflection of the international commodity market where prices have started cooling down. The situation is enough to suppress the impact of speculation and panic from the money market.
On the IMF front, the government is quite hopeful about the revival of the Fund program as they are in the final phase of discussion. The inflows under the said funding will ease the pressure on the domestic currency as the funding would improve the current status of foreign exchange reserves.
Presently, the SBP reserves are on a downward journey on the back of the soaring import bill. As per the weekly data released by SBP yesterday, the foreign exchange reserves witnessed a decline of $346m to stand at $17.14bn as of October 22, 2021.
“Market is waiting for IMF outcome expected anytime. Unless negotiations fail, PKR should continue to gain strength,” Asad Rizvi, the former Treasury Head at Chase Manhattan said.
He also warned that a delay in outcome would risk volatility in the market.
The Rupee traded in a range of 75 paisa per USD in today’s session, showing an intraday high bid of 172.25 and an intraday Low offer of 171.50.
During the week, the currency has gained 2.3 rupees against the greenback, as the previous week was concluded at PKR 174 per USD.
Within the Open Market, PKR was traded at 171.50/173.20 per USD.
Within the Open Market, PKR was traded at 174.00/175.70 per USD. According to the data compiled by Mettis Global, the domestic unit has depreciated by 8.22% or PKR 14.11 in the fiscal year-to-date against the USD. Similarly, the rupee has weakened by 6.89% or PKR 11.82 in CY21, with the month-to-date (MTD) position showing a decline of 0.58%.
Meanwhile, the currency gained 28 paisa against the Pound Sterling as the day's closing quote stood at PKR 236.72 per GBP, while the previous session closed at PKR 237 per GBP.
On the other hand, PKR's value weakened by 35 paisa against EUR which closed at PKR 200.33 at the interbank today.
On another note, within the money market, the State Bank of Pakistan (SBP) conducted an Open Market Operation in which it injected Rs.1800.15 trillion for 7 days at 7.35 percent.
The overnight repo rate towards the close of the session was 7.35/7.55 percent, whereas the 1-week rate was 7.35/7.45 percent.
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