February 13, 2023 (MLN): Snapping a gaining streak, the Pakistani rupee (PKR) has depreciated by 16 paisa against the US dollar in today's interbank session as the currency settled the trade at PKR 269.44 per USD, compared to the previous session's closing of PKR 269.28 per USD.
Throughout the session, the local unit traded in a band of 1.61 rupees, showing an intraday high bid of 270 and low offer of 269.39 while in the open market, PKR was traded at 270/273 per USD.
The local unit lost its gaining momentum as the much-anticipated Staff Level Agreement (SLA) with the visiting IMF team was not signed despite a prolonged 9-day visit by an IMF delegation.
However, the IMF released a statement indicating that virtual discussions will continue and that "considerable progress" was made on policy measures to address domestic and external imbalances.
As a prelude to the visit, the government of Pakistan abandoned the dollar peg last month, leading to a devaluation of the Pak Rupee by approximately 14% from January 26 to date.
In response, the finance minister announced in a press conference on Friday that an additional Rs170 billion in taxes will be imposed, the circular debt must be stopped, and energy sector reforms will be considered.
News reports suggest that the government will implement the tax and non-tax measures demanded by the IMF as a prior action through a Presidential Ordinance. Although the timeline may be subject to change, it is expected that the SLA will be signed in the next few weeks, as noted by Topline Securities in a latest report.
Following this, the IMF Board's approval is likely to come in about a month, paving the way for the disbursement of a $1bn tranche from the IMF and additional funding from the World Bank, ADB, and friendly nations.
Along with the delay in the IMF tranche, weak macros including workers’ remittances and foreign exchange reserves have also kept the domestic unit under pressure.
Workers' remittances for the month of January dropped to $1.9bn, showing a slump of 13% YoY and 9.8% MoM compared to $2.18bn in January 2022 and $9.8bn in December 2022, respectively.
In FYTD, PKR lost 64.59 rupees or 23.97%, while it plummeted by 43 rupees or 15.96% against the USD in CYTD. On the other hand, within the last seven sessions, the local unit moved up by 2.71%, as per data compiled by Mettis Global.
Alternatively, the currency gained 1.8 rupees against the Pound Sterling as the day's closing quote stood at PKR 324.34 per GBP, while the previous session closed at PKR 326.16 per GBP.
Similarly, PKR's value strengthened by 1.8 rupees against EUR which closed at PKR 287.41 at the interbank today.
On another note, within the money market, the overnight repo rate towards the close of the session was 16.40%/16.70%, whereas the 1-week rate was 16.77%/16.87%.
Copyright Mettis Link News
Posted on: 2023-02-13T17:02:36+05:00
