PKR depreciates 1.35 rupees in interbank, gains ground in open market

September 05, 2023 (MLN): The Pakistani rupee (PKR) continues to face immense pressure as the currency lost around 1.35 rupees against the US dollar in the interbank; however, appreciated by nearly 11 rupees in the open market during intraday trade.

The local unit was quoted at PKR 306.42/306.92 [11:59 am PST] with the trades being reported at 307 per USD, while in the open market, PKR is being traded at 320/326.5 per USD compared to the previous close of 331/334 per USD.

This positivity stems from the news regarding the recent meeting of Chief of Army Staff (COAS) Asim Munir with the business community, during which he highlighted the pivotal role of the Special Investment Facilitation Council (SIFC) and emphasized its potential to attract substantial investments of up to $100 billion.

It is important to mention that the gap between the interbank and open market was widening due to the removal of restrictions on letters of credit (LCs) which has led to an increased demand for dollars.

Consequently, the pressure on the domestic currency still prevails in the interbank market.

The Staff Report issued by the IMF on July 18, 2023 states that the board will ensure that the average premium between the interbank and open market rate is within 1.25% during any consecutive 5 business day period (continuous SB), once proper market functioning is restored.

The analyst fraternity is of the view that the interbank market will also stabilize in the coming days due to the positive sentiment regarding Chief of Army Staff (COAS) Asim Munir’s statement.

To note, as per the Staff Report by IMF, the exchange rates between Pakistani rupees and foreign currencies are to be determined free from any formal or informal influence.

Pakistan imposed import restrictions from 2022 to stem outflows from its shrinking foreign reserves. 

The removal of import restrictions, starting in June, was a condition for a $3 billion International Monetary Fund (IMF) loan program aimed at assisting the crisis-ridden economy.

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