January 28, 2022 (MLN): Pakistani rupee (PKR) managed to gain 21 paisa against the US dollar (USD) in today's interbank session as the currency closed the week’s trade at PKR176.77.
The rupee traded within a very narrow range of 20 paisa per USD showing an intraday high bid of 176.80 and an intraday low offer of 176.75.
It is pertinent to mention that PKR lost 74 paisa during the first three trading sessions of the week however, today’s gain of 21 paisa has offset some of the losses. Thus, the currency has lost 53 paisa in a week, as the previous week was concluded at PKR 176.24 per USD.
Pertaining to the decline in the central bank's reserves, Asad Rizvi, the former Treasury Head at Chase Manhattan said that the notable drop of $846 million in reserves is due to debt repayments that were supposed to start in the new year.
“Challenge is massive as the higher oil price is hurting. Remittances and exports are not ample to fill the gap. Fiscal measures are not enough,” he added.
Going forward, PKR will have to bear the brunt of soaring oil prices which are all set to further deteriorate the current account balance of Pakistan.
During the week, the local unit shed its value by 0.30%, 0.30%, and 0.28% by USD, AED, and SAR, respectively. On the flip side, the currency performed comparatively better against EUR, CHF, and GBP by 1.42%, 1.39%, and 1.23%, respectively.
Currently, PKR is hovering around 177 per USD as the 30-days rupee-dollar parity is less volatile and the rupee has been less responsive to economic events. However, it seems that the stabilizing mode of PKR is wearing off as the currency tumbled by almost 70 paisa during the last 10 sessions.
From July’21 to date, the local unit has lost Rs19.22 against the USD. Similarly, the rupee lost its ground by 25 paisa in CY22, with the month-to-date (MTD) position showing a drop of 0.15%, as per data compiled by Mettis Global.
As per the Exchange Companies Association of Pakistan (ECAP), PKR gained 50 paisa for buying and selling over the day closed at 177.50 and 178.50 respectively in the open market.
Meanwhile, the currency gained 96 paisa against the Pound Sterling as the day's closing quote stood at PKR 236.36 per GBP, while the previous session closed at PKR 237.33 per GBP.
Similarly, PKR's value strengthened by 1.3 rupees against EUR which closed at PKR 196.86 at the interbank today.
On another note, within the money market, SBP conducted an Open Market Operation (OMO) in which it injected Rs600 billion into the market for 7 days at 9.87 percent.
The overnight repo rate towards the close of the session was 9.85/10.00 percent, whereas the 1-week rate was 9.85/9.95 percent.
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