PKR gains 38 paisa against USD in intraday trade

December 06, 2023 (MLN): The Pakistani Rupee (PKR) maintained its positive trajectory for the seventh consecutive session on Thursday, appreciating by 38 paisa against the US dollar during intraday trading.

This increase was observed in comparison to the previous closing rate of PKR 284.38 per USD.

The local unit was quoted at PKR 284/284.25 [10:22 am PST]  with the trades being reported at 284 per USD.

This upswing is attributed to the successful staff-level agreement (SLA) between the International Monetary Fund (IMF) and Pakistani authorities during the first review under the Stand-By Arrangement (SBA).

Pending approval by the IMF's Executive Board, the agreement will grant Pakistan access to SDR 528 million, around $700m.

While inflows following increased regulatory and law enforcement helped normalize import and FX payments and rebuild reserves, the authorities recognize that the rupee must remain market-determined to alleviate external pressures and rebuild reserves sustainably.

To support this, they plan to strengthen the transparency and efficiency of the FX market and refrain from administrative actions to influence the rupee.

Moreover, in a recent development, Pakistan is likely to receive funds worth $1.5 billion from global lenders upon the IMF's approval of the loan tranche under the $3bn SBA, the caretaker finance minister, Dr Shamshad Akhtar stated during an interview with a local news channel.

The positivity is also fueled by the latest trade numbers for the month of November which indicate a 13.16% MoM and a 31.72% YoY reduction in the trade deficit to clock in at $1.89 billion.

Export numbers experienced a 7.66% YoY increase, reaching $2.57bn, while imports decreased by 14.47% YoY, totaling $4.46bn.

However, the local unit closed the month of November on a negative note, as it recorded a loss of 3.69 rupees against the mighty dollar, compared to the previous month's closing of 281.47 per USD.

To recall, the pressure resulting from the gap between the demand and supply of dollars prevailed over the market for days and the PKR suffered losses for four consecutive weeks.

According to Bloomberg's latest post, the local unit is set to end the year as Asia’s worst-performing currency and the losses are expected to persist in 2024.

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