PKR marches on: Upticks by 2 rupees against greenback

February 15, 2023 (MLN): Extending its gaining momentum, the Pakistani rupee (PKR) has further appreciated by 2 rupees against the US dollar in today's interbank session as the currency settles the trade at PKR 265.38 per USD, compared to yesterday's closing of PKR 267.34 per USD.

Throughout the session, the local unit traded in a band of one rupee, showing an intraday high bid of 266 and low offer of 266.5 while in the open market, PKR was traded at 266.5/269 per USD.

This appreciation is attributed to the government’s efforts to comply with IMF conditions which have created a favorable environment for the local unit in the interbank market.

In a bid to unlock the IMF stalled tranche at the earliest, the government on Wednesday increased the General Sales Tax (GST) by 1% to 18% mainly on luxury items, and a 150% surge in the rates of the Federal Excise Duty (FED) on cigarettes to collect Rs115 billion out of the planned Rs170bn taxes.

However, no tax is levied or increased on products consumed on daily basis by the lower class of the economy.

The Minister announced several proposed amendments, including an increase in federal excise duty on cigarettes and fizzy drinks, and an increase in federal excise duty on cement from Rs1.5/kg to Rs2/kg.

In FYTD, PKR lost 60.53 rupees or 22.81%, while it plummeted by 38.95 rupees or 14.68% against the USD in CYTD. On the other hand, within the last seven sessions, the local unit moved up by 2.99%, as per data compiled by Mettis Global.

The Pakistani currency also gained ground against other major currencies, with a 4.1 rupee increase against the pound sterling as the day's closing quote stood at PKR 320.66 per GBP, compared to the previous session's closing of PKR 324.81 per GBP. Similarly, the PKR gained 2.8 rupees against the euro, closing at PKR 284.2 at the interbank today.

On another note, within the money market, the overnight repo rate towards the close of the session was 16.05%/16.15%, whereas the 1-week rate was 16.45%/16.55%.

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