PKR in free fall, down to 228.14 per USD

January 12, 2023 (MLN): While enduring a strong spell of depreciation, the Pakistani rupee (PKR) further shed 22 paisa against the US dollar in today's interbank session as the currency settled the trade at PKR 228.14 per USD compared to yesterday's closing of PKR 227.93 per USD.

Within today’s session, the local unit traded in a band of 40 paisa per USD showing an intraday high bid of 228.20 and low offer of 227.90 while in the open market, PKR was traded at 236.1/238.46 per USD.

Dollar shortage amid the absence of foreign inflows through documented channels kept the local unit under pressure. At the same time, dollars in the black market are available at higher rates.

The increasing rates between dollars in the open market and the black market have fueled the panic.

Making the situation worse, the commercial banks are not returning the US dollars to depositors of Foreign Currency Saving Accounts (FCA), which is causing turmoil for depositors, Zulfikar Thaver, President of Union of Small and Medium Enterprises (UNISAME) highlighted while inviting the attention of the State Bank of Pakistan (SBP).

The dollars are kept by depositors in saving accounts for the purpose of travel to visit their relatives, pilgrimage, Haj, tuition fees, and emergency travel for medical treatment.

Banks are saying that they do not have USD, therefore they are unable to return the foreign currency to depositors, and are offering Pak rupee instead of USD at the bank rate of exchange, he added.

Moreover, depositors who are requesting immediate dollar withdrawals are advised by the bank to wait for two or three days, or else they are being offered Pak currency.

At the same time, the Federal Minister of Finance and Revenue Senator Ishaq Dar on Wednesday denied the government's consideration to access the foreign exchange held by commercial banks.

On the upside, United Arab Emirates (UAE) on Thursday agreed to roll over the existing loan of $2 billion and provide $1bn additional loan.

This development comes at a time when Pakistan is in dire need of foreign exchange.

At present, foreign exchange reserves held by the SBP dropped by $245 million to $5.57 billion during the week ended on December 30, 2022.

In FYTD, PKR lost 23.29 rupees or 10.21%, while it plummeted by 0.45% against the USD in the last seven sessions, as per data compiled by Mettis Global.

Meanwhile, the currency lost 1 paisa to the Pound Sterling as the day's closing quote stood at PKR 277.15 per GBP, while the previous session closed at PKR 277.14 per GBP.

Similarly, PKR's value weakened by 44 paisa against EUR which closed at PKR 245.37 at the interbank today.

On another note, within the money market, the overnight repo rate towards the close of the session was 15.30%/15.50%, whereas the 1-week rate was 15.15%/15.25%.

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