July 22, 2022 (MLN): Following the uncertain economic situation and political melancholy on the back of delay in the IMF tranche, melting foreign exchange reserves, and pressure of import bill, the Pakistani rupee (PKR) has plunged by 17.4 rupees against the US dollar in five consecutive sessions to settle the week’s trade at PKR 228.37 per USD.
Within today’s session, the local unit has depreciated by 1.6 rupees against the greenback while enduring a volatile trading session with quotes being recorded in a range of 2.1 rupees per USD showing an intraday high bid of 229 and an intraday low offer of 228.25.
Within the open market, PKR was traded at 228.50/230.50 per USD.
The gloomy week started off with the sharp depreciation on the back of the bye-elections held on Sunday wherein PTI secured 15 seats in an unexpected move, which had created significant uncertainty on the economic front as the results of an election would impact the economic decisions of the ruling party.
All eyes will be on the Federal Government on what decisions it takes especially regarding the hike in Electricity/Gas prices as approval of the next IMF tranche would be dependent upon such key measures agreed with IMF, Analyst at Topline Securities said.
On the other hand, Zafar Paracha, President of Exchange Companies Association of Pakistan (ECAP) told Mettis Global, “under the present macros wherein the price of oil in the international market is dropping, PKR should not be more than 190 per USD.”
No significant measure by the government to halt the freefall of PKR indicates that currency depreciation may be a part of the IMF agreement and if the situation remains the same, PKR will continue to move downwards in days to come, he added.
Government should immediately curtail their unnecessary expenditures to prevent the country from further debts otherwise, the country would face a deteriorating situation of law and order, he suggested.
According to experts, amidst the global recession, the dollar is being considered a safe haven thus the demand for the dollar is rising sky high against almost all the major currencies. PKR is no exception.
However, the political uncertainty on the local front has added more fuel to the fire which pushes demand for dollars in the interbank market and stimulated the element of speculation.
The business community also claimed that commercial banks are involved in the speculation of the dollar. Hence, they called for the intervention of the Competition Commission of Pakistan (CCP) to resolve this issue.
Considering the miserable economic situation of the country, Chairman Businessmen Group (BMG) Zubair Motiwala and President Karachi Chamber of Commerce & Industry (KCCI) Muhammad Idrees on Thursday demanded to immediately impose a financial emergency and fix the rate of the dollar for at least one month.
They also demanded that SBP should intervene to check the fall of the currency.
In CYTD, the local unit plummeted by Rs51.85 or 22.71% against the USD while it registered a decline of 10.30% against the greenback in MTD, as per data compiled by Mettis Global.
During the last 52 weeks, PKR lost 29.40% against the greenback while reaching its lowest at 228.36 on July 22, 2022, and the highest of 161.22 on July 26, 2021.
Furthermore, the local unit has weakened by 18.15% and 18.79% against EUR and GBP, respectively since its high on July 26, 2021.
The performance of the local unit remained bleak against other major currencies in CYTD as the currency lost its value by 22.71%, 22.64%, 18.27%, 17.93%, 13.94%, 12.81%, and 7.75% against AED, SAR, CHF, CNY, EUR, GBP, and JPY, respectively.
Meanwhile, the currency lost 2.8 rupees to the Pound Sterling as the day's closing quote stood at PKR 273.28 per GBP, while the previous session closed at PKR 270.52 per GBP.
Similarly, PKR's value weakened by 97 paisa against EUR which closed at PKR 231.97 at the interbank today.
On another note, within the money market, the State Bank of Pakistan (SBP) conducted an Open Market Operation (OMO) in which it mopped up Rs918.5 billion from the money market for 6 days at 14.9%.
The overnight repo rate towards the close of the session was 14.50/15%, whereas the 1-week rate was 13.95/14.05%.
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