PKR kickstarts new year on traditional note, down by 50 paisa

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By Nilam Bano | January 03, 2023 at 05:04 PM GMT+05:00

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January 03, 2023 (MLN): Pakistani rupee (PKR) has kicked off the calendar year 2023 on a negative note as the currency depreciated by 50 paisa against the US dollar in the first trading session, settling the trade at PKR 226.94 per USD, compared the previous session's closing of PKR 226.43 per USD.

Within today’s session, the local unit traded in a band of 60 paisa per USD showing an intraday high bid of 226.90 and low offer of 226.40 while in the open market, PKR was traded at 233.65/235.98 per USD.

Rising concerns over economic uncertainty wherein the SBP's foreign exchange reserves fall to the critically low level of $5.8 billion and the continuous delay in talks with IMF have made matters worst.

It is pertinent to note that Pakistan has to pay $1.3bn by January 10, 2023, which will again put a strike on the already dwindling volume of foreign exchange reserves.

Resultantly, the outlook of PKR will likely remain bleak.  

Analyst fraternity and experts are of the view that the central bank artificially kept the value of PKR intact against the US dollar which is of no use as dollars are primarily being actively traded in the grey market.

Adding fuel to the fire, the government's decision to lift the ban on imports has also put pressure on the local currency as the demand for dollars is being increased while the interbank market is suffering from a severe dollar shortage. 

Meanwhile, there is a significant difference between the rates offered by the open market and the grey market which has made the grey market attractive for the sellers of dollars.

The absence of dollars from the open market has forced people towards the bullion market which has resulted from a spike in gold prices lately.

Alternatively, the currency gained 2.2 rupees against the Pound Sterling as the day's closing quote stood at PKR 270.9 per GBP, while the previous session closed at PKR 273.08 per GBP.

Similarly, PKR's value strengthened by 1.7 rupees against EUR which closed at PKR 239.6 at the interbank today.

In FYTD, PKR lost 22.08 rupees or 9.73%, while it plummeted by 0.35% against the USD in the previous seven sessions, as per data compiled by Mettis Global.

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 Rs1.63 trillion into the market, from which Rs350bn injected into the market for 3 days at 16.50%, and Rs1.21tr for 73 days at 16.15% rate.

The overnight repo rate towards the close of the session was 15.25/15.40%, whereas the 1-week rate was 14.95/15.05%.

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