PKR loses ground, depreciates by 3.25 rupees against US Dollar

October 18, 2023 (MLN): The Pakistani rupee (PKR) which concluded its remarkable 28-day winning streak yesterday, depreciated by 3.25 rupees against the US dollar in Wednesday's interbank session to settle at PKR 280.29, compared to the previous day's closing of PKR 277.03.

The local unit saw an intraday high (bid) of 281.06 and a low (ask) of 277.4.

Moreover, in the open market, the local unit shed 6 rupees against the USD, as the exchange companies the dollar at 280 for buying and 283 for selling.

The decline in the value of domestic currency can be attributed to the low liquidity of the US Dollars within banks, due to which they are quoting tomorrow's forward rates.

Meanwhile, Syed Shabbar Zaidi, ex-chairman of the Federal Board of Revenue in a post on X (formerly Twitter) termed the US dollar hike as ‘artificial’, urging the authorities to take immediate action.

"Names of all persons buying from Exchange Companies regularly & frequently to be communicated to State Bank & FBR. Exchange Company’s sale of Dollar to be inspected daily by State Bank staff. Intelligence agencies to be activated." he added.

This price hike in $is artificial. Immediate actions. Names of all persons buying from Exchange Companies regularly & frequently to be communicated to State Bank & FBR. Exchange Company’s sale of $ to be inspected daily by State Bank staff. Intelligence agencies to be activated.

— SyedShabbarZaidi (@SShabbarZaidi) October 18, 2023

To note, the local currency had maintained a winning streak for 28 consecutive sessions amid the ongoing army-backed crackdown to restrict illegal dollar outflows, along with other administrative measures implemented by the government.

Moreover, reforms introduced by the State Bank of Pakistan (SBP) to consolidate and transform various types of exchange companies into a single category with a well-defined mandate and higher capital requirements are enhanced transparency.

To note, SBP suspended the authorization of five exchange companies of B- Category last week, underscoring the central bank's commitment to ensuring compliance with regulatory standards.

This comes in addition to the suspension of four exchange companies in the previous month.

These reforms also apply to the banks actively engaged in foreign exchange business, mandating them to set up wholly owned ECs to address the legitimate foreign exchange needs of the general public.

Following the guidelines of the central bank, certain banks such as; Habib Metropolitation Bank (PSX: HMB), Bank Al Falah Limited (BAFL), Faysal Bank Limited (PSX: FABL),  Allied Bank Limited (PSX: ABL), Bank Al Habib Limited (PSX: BAHL), MCB Bank Limited (PSX: MCB), Meezan Bank Limited (PSX: MEBL), and United Bank Limited (PSX: UBL), have decided to establish their own exchange company.

In comparison to major currencies, PKR lost 4.38 rupees against the Euro, closing at 296.49 compared to the previous value of 292.1.

The British Pound became expensive by 4.81 rupees closing at 341.94 compared to 337.12 from a day ago.

The Swiss franc saw gains of 4.52 rupees, closing at 311.67 compared to 307.15 from the previous session.

Against the Japanese Yen, PKR lost 2.04 paisa, closing at 1.872 versus 1.852 a day ago.

The Chinese Yuan gained 46.04 paisa, closing at 38.334 against 37.8736 from the previous session.

The Saudi Riyal closed at 74.72 with a gain of 86.61 paisa from its value of 73.86 a day ago.

The U.A.E Dirham increased in value by 88.36 paisa from 75.424 a day ago to 76.308.

During the current financial year, PKR has appreciated against the Dollar by 5.7 rupees or 2.03%. While the current calendar year has seen PKR depreciate by 53.86 rupees or 19.21%.

In the Money Market, the benchmark 6-month Karachi Interbank Bid and Offer rates inched down by 6 bps to 22.42% and 22.67%.

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