February 24, 2023 (MLN): The government's efforts to secure a deal with the International Monetary Fund (IMF) have resulted in a significant boost for the Pakistani rupee (PKR), which appreciated by 2.8 rupees against the US dollar during five consecutive sessions to settle the week at PKR 259.99 per USD compared to the previous week’s closing of PKR 262.82 per USD.
Within today’s session, the currency has appreciated by 94 paisa against the greenback with quotes being recorded in a range of one rupee per USD showing an intraday high bid of 260.75 and an intraday low offer of 260.25. In the open market, PKR was traded at 265/268 per USD.
The increase in the PKR's value against the US dollar is being viewed as a positive sign for Pakistan's economy, which has been facing significant challenges in recent months.
The government’s progress in securing a deal with the IMF is expected to address these issues and improve the country's economic outlook.
Meanwhile, on the economic front, Pakistan posted a current account deficit (CAD) of $3.8 billion in 7MFY23, improving by 67.13% YoY as compared to the same period last year.
In addition, the Foreign Direct Investment (FDI) in the country jumped by over 2x YoY to $222.6mn in January 2023.
Though the government has almost complied with all the conditions of the fund, the delay in Staff Level Agreement (SLA) once again messed with the market sentiments as the local unit depreciated by 63 paisa on Tuesday.
However, on Wednesday, Shehbaz Sharif said while addressing a meeting with Federal Cabinet said, “The government has made significant progress in meeting the IMF terms, with only one or two items remaining to achieve full compliance.”
Cherry on the top, on the same day, Federal Minister for Finance and Revenue, Senator Ishaq Dar informed that the loan has been approved by the Board of China Development Bank and all formalities have been completed as per which cash-strapped Pakistan is set to receive a much-needed boost as China is likely t to provide a loan of $700 million.
The loan is expected to be received by the central bank this week, which will help shore up the country's foreign exchange reserves.
At present, the foreign exchange reserves held by the State Bank of Pakistan (SBP) stood at $3.25 billion, up by $65.6 million or 2.05% WoW during the week ended on February 17, 2023, marking the second consecutive increase on weekly basis, according to the data released by the central bank on Thursday.
The central bank is also expected to raise interest rates in an off-cycle review this week, as the country seeks to repair its finances and secure a loan from the fund.
These decisions, undoubtedly, were the most difficult decisions for the coalition government in the political landscape of Pakistan but much needed to close the deal with the fund.
In FYTD, PKR lost 57.14 rupees or 21.21%, while it plummeted by 33.55 rupees or 12.91% against the USD in CYTD. On the other hand, within the last seven sessions, the local unit moved up by 1.09%, as per data compiled by Mettis Global.
The currency gained 2.1 rupees against the Pound Sterling as the day's closing quote stood at PKR 312.56 per GBP, while the previous session closed at PKR 314.71 per GBP.
Similarly, PKR's value strengthened by 1.7 rupees against EUR which closed at PKR 275.27 at the interbank today.
On another note, within the money market, the State Bank of Pakistan (SBP) conducted an Open Market Operation (OMO), and Shariah-compliant Mudarabah OMO today, in which it cumulatively injected a total of Rs1.82 trillion into the market, from which Rs1.8tr injected into the market for 7 days at 17.25%.
The overnight repo rate towards the close of the session was 17.5%/17.8%, whereas the 1-week rate was 17.15%/17.25%.
Copyright Mettis Link News
Posted on: 2023-02-24T17:34:14+05:00
