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PKR bleeds value by 19 rupees as mighty dollar tightens grip

PKR bleeds value by 19 rupees as mighty dollar tightens grip
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March 02, 2023 (MLN): Amidst the prolonged delay in the IMF tranche, political upheaval, rising economic uncertainty, and default noise, the Pakistani rupee (PKR) has plummeted by 19 rupees against US dollar in today's interbank session as the currency settled the trade at PKR 285.09 per USD, against yesterday's closing of PKR 266.11 per USD.

Throughout today’s session, the local unit remained volatile and traded in a band of 18.1 rupees, showing an intraday high bid of 285.1 and low offer of 268 while in the open market, PKR was traded at 287/290 per USD.

The local unit is facing renewed pressure due to the delay and imposition of new conditions by the International Monetary Fund (IMF).

It is important to note that the forex market was stable in February however, the delay in the IMF agreement and the higher open market rate in Afghanistan have led to a decline in the value of the rupee.

This has caused concern among investors as it could negatively impact foreign investment and destabilize the economy.

Experts are calling for strict measures by the government against those involved in the illegal buying and selling of dollars. They have also urged the government to expedite the fulfillment of IMF's conditions to prevent further panic in the market.

News reports further suggested that the IMF has demanded that Pakistan trade the dollar at the current Afghan trade rate in order to ensure stability in the currency market.

The prerequisites by the lender are aimed at ensuring Pakistan shrinks its fiscal deficit ahead of its annual budget around June.

The government has already taken most of the other prior actions, such as increasing fuel and energy tariffs, withdrawing subsidies in export and power sectors, and generating more revenues through new taxation in a supplementary budget.

However, the fiscal adjustments demanded by any deal are likely to further fuel record-high inflation, which hit 31.5% year-on-year in February.

Pakistan is yet to meet two other demands by the IMF, which are bilateral and multilateral external financing commitments and raising policy rates.

In a recent development, the Federal Minister for Finance and Revenue Senetaor Ishaq Dar on Thursday refuted rumors that Pakistan is on the brink of defaulting on its external debt payments.

Taking his official Twitter handle, Ishaq Dar stated that "anti-Pakistan elements" were spreading "malicious rumors" about the country's economic situation and insisted that these claims were "completely false."

In FYTD, PKR lost 80.24 rupees or 28.15%, while it plummeted by 58.65 rupees or 20.58% against the USD in CYTD. On the other hand, within the last seven sessions, the local unit moved down by 8.47%, as per data compiled by Mettis Global.

Meanwhile, the currency lost 19.7 rupees to the Pound Sterling as the day's closing quote stood at PKR 341.27 per GBP, while the previous session closed at PKR 321.53 per GBP.

Similarly, PKR's value weakened by 20 rupees against EUR which closed at PKR 303.11 at the interbank today.

On another note, within the money market, the overnight repo rate towards the close of the session was 16.75%/17.25%, whereas the 1-week rate was 17.6%/17.7%.

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Posted on: 2023-03-02T16:36:55+05:00