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PKR: Riding on a slippery slope

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March 18, 2022 (MLN): In the backdrop of political upheaval in the country, overnight increase in oil prices and decline in foreign exchange reserves, the Pakistani rupee witnessed another day in a spell of depreciation, losing 50 more paisa to close the week at 180.57 against the greenback.

Throughout the day, the local unit traded in a range of 60 paisa per USD showing an intraday high bid of 180.70 and an intraday low offer of 180.20.

The chaotic and puzzling environment mainly due to the unconcluded talks between Russia and Ukraine which has raised the concern of a prolonged disruption to oil supply, and political noise on the local front have compelled local unit to make all-time new lows during the week, depreciating by 2.1 rupees against the greenback, as the previous week was concluded at PKR 178.51 per USD.

Meanwhile, the soaring import bill due to the continuous rise in oil prices has also pushed PKR to lose its valuation.

“Normally market is choppy on weekends. As banks prefer to cover positions. With the hike in FED rate, the dollar is getting costly too,” Asad Rizvi, the former Treasury Head at Chase Manhattan said. 

In addition, the foreign exchange reserves have also declined by $381mn to $15.832bn which is the 6th conservative fall since February.

As per money market experts, PKR will continue to bear downward pressure, going forward, if the ongoing crisis on the global front does not settle down.

From July’21 to date, the local unit has lost Rs23.02 against the USD. Similarly, the rupee fell by PKR4.05 in CY22, with the month-to-date (MTD) position showing a decline of 1.71%, as per data compiled by Mettis Global.

During the last 52 weeks, PKR lost 15.67% against the greenback, reached its lowest at 180.57 today and touched its high of 152.27 on May 7, 2021.

Furthermore, the local unit has weakened by 10.20% since its high on March 31, 2021, against EUR.  While, it has dropped by 11.62% against GBP since its high on April 09, 2021.

Within the open market, PKR was traded at 179.80/181 per USD.

Alternatively, the currency gained 8 paisa against the Pound Sterling as the day's closing quote stood at PKR 237.2 per GBP, while the previous session closed at PKR 237.28 per GBP.

On the other hand, PKR's value weakened by 80 paisa against EUR which closed at PKR 199.78 at the interbank today.

On another note, within the money market, the State Bank of Pakistan (SBP) conducted an Open Market Operation in which it injected Rs3.05 trillion into the market for 7 days at 9.77 percent.

The overnight repo rate towards the close of the session was 10.25/10.50 percent, whereas the 1-week rate was 10.08/10.18 percent.

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Posted on: 2022-03-18T17:20:38+05:00

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