PKR falls by 71 paisa in a week on plummeting reserves

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By Nilam Bano | January 06, 2023 at 05:16 PM GMT+05:00

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January 06, 2023 (MLN): Amidst melting foreign exchange reserves and the absence of foreign inflows, the pressure on the local unit is keep piling up as the Pakistani rupee (PKR) fell by 71 paisa against the greenback to close the week at PKR 227.14 per USD, compared to the previous week close of PKR 226.43 per USD.

Within today’s session, the local unit traded in a band of 25 paisa per USD showing an intraday high bid of 227.25 and low offer of 227.20 while in the open market, PKR was traded at 234.35/236.69 per USD.

The country is going through a challenging time where the expected inflows become prey to continuous delay while the foreign exchange is keep melting due to external debt payments.

At present, the foreign exchange reserves held by the State Bank of Pakistan (SBP) dropped by $245 million to $5.57 billion during the week ended on December 30, 2022. Meanwhile, the total debt of the central government surged to Rs50.9 trillion in November 2022, compared to Rs47.8tr in June 2022, witnessing an increase of Rs3.2tr or 6.52% in 5MFY23.

The increase in debt burden is primarily attributed to borrowing from domestic and foreign sources to cover the fiscal deficit.

In addition, the dollar shortage amid increasing the spread between rates in the open market and the black market has also increased the pressure on the local unit.

On the IMF front, In a major breakthrough,  Kristalina Georgieva, the managing director of the fund has assured that a team will visit Pakistan in days to come for a review of the economy. 

The arrival of a much-needed tranche in time may take some pressure off the local currency. 

In FYTD, PKR lost 22.29 rupees or 9.81%, while it plummeted by 0.31% against the USD in the last seven sessions, as per data compiled by Mettis Global.

Alternatively, the currency gained 2.5 rupees against the Pound Sterling as the day's closing quote stood at PKR 270.36 per GBP, while the previous session closed at PKR 272.84 per GBP.

Similarly, PKR's value strengthened by 2 rupees against EUR which closed at PKR 239.15 at the interbank today.

On another note, within the money market, the central bank conducted an Open Market Operation (OMO), and Shariah-compliant Mudarabah OMO today, in which it cumulatively injected a total of Rs555.75 billion into the market, from which Rs84bn injected into the market for 7 days at 16.25%, and Rs417bn for 70 days at 16.16% rate.

The overnight repo rate towards the close of the session was 15.50%/15.75%, whereas the 1-week rate was 15.31%/15.41%.

Copyright Mettis Link News

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