August 24, 2021 (MLN): Contrast to the market expectation, the Pakistani rupee (PKR) closed today’s session at PKR165.2 per USD, its lowest since September 30, 2020, depreciating by 78 paisa than yesterday’s closing of PKR 164.43 per USD.
Despite receiving $2.75 billion from IMF under new SDR allocation today, the home unit witnessed sharp decline in the interbank session owing to the geographical unrest in the region and higher import bill.
This IMF allocation of $2.77bn is conditional money to support the coronavirus crisis and not to use for the fiscal space, as per Asad Rizvi, the former Treasury Head at Chase Manhattan Bank.
Economic reforms can neither be delayed nor can be used for debt restructuring. PKR could trade in a wide range due to geopolitical AFGHAN uncertainty, he noted.
“Foreign banks are buyers. I am expecting that market will ease, once they are done,” he said on his Twitter handle.
Talking to Mettis Global, Zafar Paracha, Secretary-General Exchange Companies Association of Pakistan said, “the delay in payments from Afghanistan against Pakistan’s export has created pressure over the rupee.”
In addition, the surging import volume of LNG and increasing oil prices have inflated the import bill while the import of Covid-19 vaccination has also added significant pressure on the payment side, he added.
While speaking to Mettis Global, Malik Bostan, President Forex Association of Pakistan pointed out that Afghan traders are opening import LCs from Pakistan as they cannot open from their own homeland due to ongoing turbulence which has also weighed on the local currency of Pakistan.
After June 30, 2021- the last day of the Amnesty Scheme, the shortage of US dollars is visibly seen in the market that in turn affects the local currency as it has declined inflow of dollars from foreign countries/investors, he noted.
So far, the home unit depreciated by 4.64% in FY22 when compared to the closing value of 157.74 per USD.
To note, the rupee dropped by 43 paisa against the greenback in the early trade today.
The rupee traded within a very narrow range of 73 paisa per USD showing an intraday high bid of 165.30 and an intraday Low offer of 164.67.
Within the Open Market, PKR was traded at 164.80/165.60 per USD.
According to the data compiled by Mettis Global, the local unit has depreciated by 4.64% and 3.25% in FY22 and CY21, respectively with the month-to-date (MTD) position showing a drop of 1.68%.
Meanwhile, the currency lost 1.9 rupees to the Pound Sterling as the day's closing quote stood at PKR 226.33 per GBP, while the previous session closed at PKR 224.45 per GBP.
Similarly, PKR's value weakened by 96 paisa against EUR which closed at PKR 193.78 at the interbank today.
On another note, within the money market, the overnight repo rate towards close of the session was 7.05/7.15 percent, whereas the 1 week rate was 7.05/7.10 percent.
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