July 18, 2022 (MLN): In the backdrop of rising uncertainty on the political front, the Pakistani rupee (PKR) has plunged to PKR 215.2 per USD or 1.97% in today’s interbank session, slashing by over four rupees compared to the previous close of PKR 210.95 per USD.
This was the huge single day decline after 28 months as the last time PKR was witnessed a massive fall of 1.97% on March 20, 2022.
The rupee endured a volatile trading session with quotes being recorded in a range of 5.5 rupees per USD showing an intraday high bid of 215.75 and an intraday low offer of 210.75 while in the open market, PKR was traded at 213/216 per USD.
Political noise owing to the bye-elections held on Sunday wherein PTI has secured 15 seats in an unexpected move, has created significant uncertainty on the economic front as the results of an election would impact the economic decisions of the ruling party.
“Yesterday's Punjab by-elections have increased political uncertainty which breeds economic instability. Despite Miftah's assurances of forthcoming help from overseas friends, Rupee is sliding,” former Finance Minister Shaukat Tarin said while taking to his Twitter handle on Monday.
“We need to announce general elections to kill this uncertainty,” he added.
“Dollar is up on the back of political uncertainty and IMF statement of releasing $1.7bn after two to three weeks impacting imminent demand for USD by importers,” Ahsan Mehanti, Director of Arif Habib Group told Mettis Global.
These results will increase the political noise & uncertainty in the country and can also impact the economic decision making of PML-N led Federal Government as it may find it tough to take difficult economic decisions, Analyst at Topline Securities said.
All eyes will be on Federal Government on what decisions it takes specially regarding hike in Electricity/Gas prices as approval of next IMF tranche would be dependent upon such key measures agreed with IMF, he noted.
Since coalition government has come in to power, the rupee has depreciated by 32.07 rupees or 17.5%.
In CYTD, the local unit plummeted by Rs38.68 or 17.98% against the USD while it registered a decline of 4.81% against the greenback in MTD, as per data compiled by Mettis Global.
During the last 52 weeks, PKR lost 28.08% against the greenback while reaching its lowest at 215.19 on July 18, 2022, and the highest of 161.22 on July 26, 2021.
Furthermore, the local unit has weakened by 12.99% and 13.85% against EUR and GBP, respectively since its high on July 21, 2021.
The performance of the local unit remained bleak against other major currencies in CYTD as the currency lost its value by 17.98%, 17.95%, 13.20%, 12.57%, 8.52%, 7.37%, and 1.71% against AED, SAR, CNY, CHF, EUR, GBP, and JPY, respectively.
Meanwhile, the currency lost 7.6 rupees to the Pound Sterling as the day's closing quote stood at PKR 257.25 per GBP, while the previous session closed at PKR 249.64 per GBP.
Similarly, PKR's value weakened by 6.7 rupees against EUR which closed at PKR 218.23 at the interbank today.
On another note, within the money market, the State Bank of Pakistan (SBP) conducted an Open Market Operation (OMO) in which it mopped up Rs533 billion from the money market for 4 days at 14.9%.
The overnight repo rate towards close of the session was 14.10/14.50%, whereas the 1-week rate was 13.95/14.05%.
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