PKR dives by 1.2 rupees against greenback

April 03, 2023 (MLN): Owing to the delay in the IMF deal, plunging reserves and political heat, the Pakistani rupee (PKR) has depreciated by 1.2 rupees against the US dollar in today's interbank session as the currency settled the trade at PKR 285.04 per USD compared to previous session's close of PKR 283.79 per USD.

Throughout today’s session, the local unit traded in a band of 1.35 rupees, showing an intraday high bid of 285 and low offer of 283.9 while in the open market, PKR was traded at 284/287.5 per USD.

The cash-strapped economy is looking forward to the much-needed IMF tranche and timely assistance from friendly nations.

Meanwhile, the foreign exchange reserves held by the State Bank of Pakistan (SBP) recorded a drop of $354 million or 7.7% WoW to $4.24 billion, highlighting the need for the IMF program to be restarted.

Currently, the IMF bailout for Pakistan is stuck at the ninth review stage, as the organization looks for commitments from friendly nations to revive its Extended Fund Facility.

Finance Minister Ishaq Dar has repeatedly stated that the program is on track, given the completion of domestic economic measures.

However, a staff-level agreement with the IMF has yet to be reached, particularly after Prime Minister Shehbaz Sharif announced a fuel relief package without consulting the IMF.

Given these uncertain circumstances, the experts anticipate that the Pakistani currency will remain under pressure, especially since a reduction in oil production could increase commodity prices and place the current account under strain.

Alternatively, the currency gained 50 paisa against the Pound Sterling as the day's closing quote stood at PKR 351.16 per GBP, while the previous session closed at PKR 351.66 per GBP.

Similarly, PKR's value strengthened by 49 paisa against EUR which closed at PKR 308.9 at the interbank today.

In FYTD, PKR lost 80.19 rupees or 28.13%, while it plummeted by 58.61 rupees or 20.56% against the USD in CYTD. On the other hand, within the last seven sessions, the local unit moved down by 0.51%, as per data compiled by Mettis Global.

On another note, within the money market, the SBP conducted an Open Market Operation (OMO) in which it mopped up a total of Rs251 billion from the market.

The overnight repo rate towards the close of the session was 19.25%/19.50%, whereas the 1-week rate was 19.77%/19.87%.

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