June 25, 2021 (MLN): Pakistani rupee (PKR) on Friday appreciated by 6 paisa against US Dollar (USD) in today's interbank session as the currency closed the day's trade at PKR 157.62 per USD, against yesterday's closing of PKR 157.68 per USD.
The rupee traded within a very narrow range of 30 paisa per USD showing an intraday high bid of 157.65 and an intraday Low offer of 157.45 while in the Open Market, PKR was traded at 158/159 per USD.
“Rupee could open with a firmer tone but is likely to wobble due to an increase in the demand for dollars at the time of financial year closing,” Asad Rizvi, Former Treasury Head-Chase Manhattan Bank tweeted this morning.
Currency experts said that at the end of the fiscal year, the demand for foreign currency is normally high as corporate entities have to pay back profits on foreign investments and dues that appreciate American currency against the home unit.
“Fall in FX reserves & weekend holiday in Gulf may add pressure. However, it is encouraging to see interest in B/S Swap in 9 & 12 months, which means the inflow of dollars as exporters are selling USD,” he added.
The Rupee had appreciated 9% against USD on account of Pakistan's strong external position and market-determined exchange rate. However, it has declined 3.01% to date since April 21.
Of late, the rupee has been under pressure mainly due to the current account (C/A) being in deficit since Dec’20 while cumulatively, the current account has shown a USD1.1 billion deficit during Dec’20-Apr’21, with the same expected to worsen further towards FY21 close as the trade deficit continues to widen (up 30% 11MFY21) due to soaring imports, a report by Taurus highlighted.
In addition, Real-Effective Exchange Rate was also recorded as slightly overvalued at Apr'21 close, signaling a slight correction in the months ahead. The decline in forex reserves by USD 330mn WoW also weighed on the local currency although Pakistan has been successful in getting relief from G-20 countries, for deferring loan repayments till the end of CY21.
The uncertainty about the ongoing negotiation between the International Monetary Fund (IMF) and Pakistan as part of a sixth review of the country's 39-month also exerted pressure on the rupee, the research added.
During the week, the currency has lost 72 paisa against the greenback, as the previous week was concluded at PKR 156.89 per USD.
With a gain of 6 paisa today, the local unit has gained 6.62% or PKR10.43 in the fiscal year-to-date while the appreciation has been 1.41% or PKR2.21 in CY21. The month-to-date (MTD) position showed a decrease of 2.04%, as per the data compiled by Mettis Global.
Meanwhile, the currency gained 1.1 rupees against the Pound Sterling as the day's closing quote stood at PKR 219.21 per GBP, while the previous session closed at PKR 220.34 per GBP.
On the other hand, PKR's value weakened by 9 paisa against EUR which closed at PKR 188.23 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.1.8 trillion for 7 days at 7.06 percent.
The overnight repo rate towards close of the session was 7.00/7.15 percent, whereas the 1 week rate was 7.05/7.10 percent.
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