PKR gains over 88 paisa against greenback in interbank

November 17, 2023 (MLN): The Pakistani rupee (PKR) appreciated by over 88 paisa against the US dollar in Friday's interbank session as the currency settled the trade at PKR 286.5, compared to the previous day's closing of PKR 287.38 per USD.

The local unit saw an intraday high (bid) of 287.05 and a low (ask) of 286.75.

In the open market, the local unit gained 50 paisa as exchange companies quoted the dollar at 288 for buying and 289 for selling, compared to the previous closing of 288.5 for buying and 289.5 for selling.

This upswing follows the staff-level agreement successfully being reached between the International Monetary Fund (IMF) and Pakistani authorities on the first review under Pakistan's Stand-By Arrangement (SBA).

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

This will bring the total disbursements under the program to almost $1.9 billion.

In the statement issued by the IMF yesterday, the Fund said that strengthening macroeconomic sustainability and laying the conditions for balanced growth are key priorities under the SBA.

The authorities’ policy priorities include returning to a market-determined exchange rate and rebuilding FX reserves.

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.

It is worth mentioning that the local Rupee snapped its 17-day-long losing streak against the mighty dollar at yesterday's close.

The pressure resulting from the gap between the demand and supply of dollars prevailed over the market for days and the PKR remained under pressure for four consecutive weeks.

However, the local unit appreciated by 53 paisa against the greenback this week owing to the positivity arising from IMF's approval in the first review.

However, as per Bloomberg's latest report, the local unit's outlook will improve following the International Monetary Fund’s preliminary approval for the release of the next loan tranche under the current $3bn loan program.

In comparison to major currencies, PKR gained 1.36 rupees against the Euro, closing at 310.25 compared to the previous value of 311.6.

The British Pound became cheaper by 1.1 rupees, closing at 354.8 compared to 355.9 from a day ago.

Swiss franc saw losses of 1.25 rupees, closing at 322.2 compared to 323.44 from the previous session.

Against the Japanese Yen, PKR lost 0.64 paisa, closing at 1.905 versus 1.898 a day ago.

The Chinese Yuan lost 7.26 paisa, closing at 39.5322 against 39.6048 from the previous session.

The Saudi Riyal closed at 76.39 with a loss of 23.59 paisa from its value of 76.63 a day ago.

The U.A.E Dirham decreased in value by 23.97 paisa from 78.242 a day ago to 78.003.

During the current financial year, PKR has depreciated against the Dollar by 0.51 rupees or 0.18%. While the current calendar year has seen PKR depreciate by 60.07 rupees or 20.97%.

In the Money Market, the benchmark 6-month Karachi Interbank Bid and Offer rates inched down by 13 bps to 20.96% and 21.21%.

The State Bank of Pakistan (SBP) conducted a reverse repo and Shariah-compliant Modarabah-based Open Market Operation (OMO) today, in which it cumulatively injected a total of Rs1.7 trillion into the market.

Of which Rs1.54tr were injected through reverse repo OMO. 

Meanwhile, the remaining Rs164bn was injected through Shariah-compliant Modarabah-based OMO. 

It is important to mention that in the T-Bills auction on Wednesday, the central bank sold Market Treasury Bills (MTBs) worth Rs1.161 trillion for 3,6 and 12 months against a target of Rs1.5tr.

A record-high participation in 12-month MTBs was seen for the third consecutive auction.

The yields for all three tenors fell by 45-50 bps, to 21.5%, once again indicating the market’s expectations of the peak in interest rates.

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