PKR rally secures 2.3 rupees in a week

February 04, 2022 (MLN): Pakistani rupee (PKR) rally continued hitting an upward trail against the US dollar, appreciating by 1 rupee in the interbank session as the currency closed the week’s trade at PKR 174.48.

The rupee traded in a range of 65 paisa per USD showing an intraday high bid of 175.05 and an intraday low offer of 174.50.

This gaining momentum of PKR is attributed to the strong macroeconomic indicators that created enough stability in the interbank market.

Speaking to Mettis Global, Zafar Paracha, President Exchange Companies of Pakistan (ECAP) said the local unit will continue to remain on the upward trajectory in the medium term as its valuation in real terms is below 170 per dollar but the overvaluation of the US dollar has made local unit to be treated below its real value.  

Despite witnessing a continuous decline in foreign exchange reserves, the strong recovery in PKR is due to the apt measures taken by the State Bank of Pakistan (SBP). Furthermore, the government’s efforts to fulfil IMF’s condition for the approval of the upcoming tranche has also played its due role behind getting back the local unit’s lost value, he added.

To note, the foreign exchange reserves held by the country dipped by $395.5 million or 1.75% WoW to stand at $22.08 billion but the performance of trade statistics, the inflow of $1bn against International Sukuk, and IMF’s approval have offset its impact on PKR.

Throughout the week, PKR maintained its stability while making a notable gain of 2.3 rupees against the greenback, as the previous week was concluded at 176.77 per USD. Optimism in the market pertaining to domestic unit started gaining strength after the announcement of the IMF Board’s approval which pushed PKR to increase its value by 89 paisa in a single trading session on Thursday.

Meanwhile, the local unit has lost Rs16.94 against the USD from July’21 to date, Whereas, the rupee appreciated by PKR 2 in CY22, with the month-to-date (MTD) position showing a gain of 1.29%, as per data compiled by Mettis Global.

While moving on the upward journey, the performance of PKR remained comparatively better against other currencies as well as the local unit appreciated by 1.31% against CNY, AED, SAR and USD during the week. However, it had to lose some ground against EUR and GBP by 1.57%, and 0.29%, respectively.

According to the ECAP, PKR gained 50 paisa in the open market as the currency closed at PKR 176 and PKR 177 for buying and selling, respectively.

The currency gained 83 paisa against the Pound Sterling as the day's closing quote stood at PKR 237.05 per GBP, while the previous session closed at PKR 237.89 per GBP.

On the other hand, PKR's value weakened by 1.8 rupees against EUR which closed at PKR 199.99 at the interbank today.

On another note, within the money market, SBP conducted an Open Market Operation (OMO) in which it injected Rs772.2 billion into the market for 7 days at 9.85 percent.

The overnight repo rate towards close of the session was 9.75/9.90 percent, whereas the 1-week rate was 9.85/9.95 percent.

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