PKR plummets by 6 rupees against USD in open market

October 18, 2023 (MLN): The Pakistani rupee (PKR), which concluded its remarkable 28-day winning streak yesterday, lost more ground today during intraday trade, plummeting by 6 rupees in the open market and 4 rupees in interbank against the US Dollar.

The local unit was quoted at PKR 281/282 [01:09pm PST] with the trades being reported at 281 per USD.

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

In the open market, PKR is being traded at 280/283 per USD, depicting a depreciation of 6 rupees compared to the previous session.

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.

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