PKR gains 29 paisa against USD in a week

March 15, 2024 (MLN): The Pakistani rupee (PKR) appreciated by 29.4 paisa against US dollar in interbank market this week, settling at PKR 278.74 per USD, compared to the previous week's closing of PKR 279.04 per USD.

While in today's session alone, PKR edged up by 2.92 paisa against the US dollar.

Throughout Friday's session, the currency saw an intraday high (bid) of 278.85 and a low (ask) of 278.65.

In the open market, exchange companies quoted the dollar at 278.61 for buying and 281.26 for selling.

This sudden strengthening of domestic currency can be attributed to exporters selling Dollars in forward, leading to a drop in premiums.

According to Goldman Sachs’ GSDEER framework, PKR is nearly 20% undervalued on a 12-month horizon and offers about 26% nominal carry.

The Goldman Sachs Economic Research report further suggests that positive real rates could be the catalyst needed for the Rupee's value increase, provided inflation rates begin to decline.

It is crucial to note that Pakistan and the International Monetary Fund (IMF) have commenced the second review of the Stand-By Arrangement signed on June 30, 2023.

This would be the final review of SBA, and staff-level agreement is expected after this appraisal.

Once Staff level agreement is reached, the final tranche of $1.1 billion will be disbursed, following the approval of the Executive Board of IMF.

In comparison to major currencies, PKR gained 1.57 rupees against the Euro, closing at 303.33 compared to the previous value of 304.89.

The British Pound became cheaper by 1.79 rupees closing at 355.17 compared to 356.97 from a day ago.

The Swiss franc saw losses of 1.86 rupees, closing at 315 compared to 316.86 from the previous session.

Against the Japanese Yen, PKR gained 0.77 paisa, closing at 1.8779 versus 1.8856 a day ago.

The Chinese Yuan lost 2.16 paisa, closing at 38.74 against 38.76 from the previous session.

The Saudi Riyal closed at 74.33 with a loss of 0.39 paisa from its value of 74.33 a day ago.

The U.A.E Dirham decreased in value by 0.18 paisa from 75.9 a day ago to 75.9.

During the current financial year, PKR has appreciated against the Dollar by 7.25 rupees or 2.6%. While the current calendar year has seen PKR appreciate by 3.12 rupees or 1.12%.

In the Money Market, the benchmark 6-month Karachi Interbank Bid and Offer rates inched down by 4 bps to 21.06% and 21.31%.

Investors are now bracing for the upcoming monetary policy decision, wherein the market is somewhat divided on the appropriate action for the State Bank of Pakistan.

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