September 09, 2022 (MLN): In the backdrop of dismal macros and political uncertainty, the Pakistani rupee (PKR) has depreciated by 9.2 rupees against the greenback to close the week at PKR 228.18 per USD.

Within today’s session, the local unit depreciated by 2.73 rupees against the US dollar on increased demand for dollar on increasing import bill. During the session, the trades were reported in a band of 3.6 rupees per USD showing an intraday high of 229 and an intraday low offer of 225.50. Meanwhile, in the open market, PKR was traded at 231/234 per USD.

The local unit is enduring pressure on the back of rising dollar demand. Meanwhile, the gloomy macros as a result of historic floods have also dampened sentiments in the interbank market.

Particularly, the inflation will keep on hitting the economy in months to come to supply chain disruption and as a result, the government had to import onions and tomatoes from other countries which would also increase the import bill.

Speaking to Mettis Global, Malik Bostan President of the Forex Association of Pakistan also said that the depreciation of rupees against dollar is due to the increasing import volume from Iran and Afghanistan that has increased the demand for dollar in the interbank market.

Following the destruction caused by flash floods, he suggested the government take steps to counter the crisis of wheat harvesting and other items so that in the coming months, relief can be given to the public.

The government should focus to attract foreign investment to the country, he added.

Meanwhile, Finance Minister Miftah Ismail, in his latest interview with CNBC said that aid from other countries is not sufficient to encounter the devastating impact created by monsoon floods.

According to the report by Business Recorder, “The pressure lately is building from the informal open market where high demand is coming from Peshawar. Some say that this is due to an increase in the informal trade of food items (mainly vegetables) from Afghanistan and Iran, and that is resulting in high demand for dollars to pay against the goods.”

Another reason exchange companies are citing is that due to floods, supply from informal small players is not coming, it added.

Market experts are of the view that uncertainty on the political front and delay in inflows from friendly countries have put immense pressure on the local unit.

However, in the international market, the dollar took a breather from its surging rally on Friday as markets digested yet more hawkish Fed speak, while the euro hung on to parity, helped by an outsized rate hike from the European Central Bank.

Currency moves overnight were calmer for once even as Federal Reserve Chair Jerome Powell reaffirmed the central bank's aggressive stance against inflation, which reinforced the greenback's dominance.

The currency lost 6.24 rupees to the Pound Sterling as the day's closing quote stood at PKR 265.25per GBP, while the previous session closed at PKR 259.01 per GBP.

Similarly, PKR's value weakened by 5.22 rupees against EUR which closed at PKR 230.41at the interbank today.

Within the week, the domestic unit has weakened by 5.92%, 5.04%, 4.53%,4.04%, 4.03%, 3.74% and 2.56% against CHF, EUR, GBP, SAR, AED, CNY, and JPY, respectively. 

In FYTD, PKR lost 23.33 rupees or 10.23%, while it plummeted by 51.67 rupees or 22.64% against the USD in CYTD, as per data compiled by Mettis Global.

During the last 52 weeks, PKR lost 26.37% against the greenback while reaching its lowest at 239.94 on July 28, 2022, and the highest at 168 on September 10, 2021.

Furthermore, the local unit has weakened by 15.91% against EUR when it was highest on March 07, 22, while the rupee fell by 13.52% against GBP since its high on September 30, 2021.

In FYTD, the local unit depreciated by 10.23%, 10.09%, 9.83%, 7.21%, 7.16%, 6.32%, and 6.11%, against AED, SAR, CHF, EUR, CNY, and GBP, respectively. 

On another note, within the money market, the State Bank of Pakistan (SBP) injected Rs381.2 billion into the money market through reverse repo purchase and Shariah-compliant mudarabah-based open market operation.

The overnight repo rate towards the close of the session was 15/15.10%, whereas the 1-week rate was 14.95%/15.05%.

Copyright Mettis Link News

Posted on:2022-09-09T16:41:46+05:00

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