PKR sinks to 239.94 per USD

July 28, 2022 (MLN): Enduring a strong spell of depreciation, the Pakistani rupee (PKR) has lost 3.9 rupees against the greenback in today’s interbank session as the currency settled the trade at PKR 239.94 compared to yesterday's closing of 236.02 per USD.

The rupee observed a volatile trading session with quotes being recorded in a range of 3.5 rupees per USD showing an intraday high bid of 240 and an intraday low offer of 237.75 while in the open market, PKR was traded at 242/244 per USD.

Owing to the gloomy macros i.e, deteriorating current account balance, melting foreign exchange reserves, and chaos amongst importers, the Pakistani rupee (PKR) hit the mark of 240 per US dollar in the intraday trade.

The current account deficit (CAD) was recorded at $17.4 billion in FY22, up by a whopping 6.2x YoY when compared to a deficit of $2.8bn in FY21, mainly on the back of higher import bill and muted growth in workers’ remittances.

The economic mayhem has created uncertainty amongst traders especially importers pertaining to the payment of import bills. In addition, the banks are quoting higher than the interbank rates for opening LCs.

Recently, Pakistan Chemicals & Dyed Merchant Association (PCDMA) registered a complaint regarding banks charging higher exchange rates than interbank rates.

In a letter written to Acting Governor SBP, Dr. Murtaza Syed, the association said that these days they are facing great hardship as the commercial banks are not following the interbank rate amidst the constant slide of the local currency against the US Dollar in retiring their documents.

With regard to the continuous depreciation of PKR, Zafar Paracha, President of the Exchange Companies Association of Pakistan (ECAP) is of the view that the government is intentionally kept the bullish momentum of the dollar in the interbank market intact as it may be one of the conditionalities of IMF.

In this connection, the latest report surfaced by Business Recorder saying, "Finance Minister Miftah Ismail on Wednesday said that the government interventions in the foreign exchange (forex) market cannot be made to control the rate of the dollar in light of the commitment with IMF."

However, all other regulatory enforcement measures with the banks and currency exchange companies were being ensured, he added.

In CYTD, the local unit plummeted by Rs63.49 or 26.44% against the USD while it registered a decline of 14.63% against the greenback in MTD, as per data compiled by Mettis Global.

During the last 52 weeks, PKR lost 32.53% against the greenback while reaching its lowest at 239.94 on July 28, 2022, and the highest of 161.88 on July 29, 2021.

Furthermore, the local unit has weakened by 21.70% and 23.53% against EUR and GBP, respectively since its high on August 20, 2021.

In addition to it, the performance of the local unit remained bleak against other major currencies in one month as the currency lost 13.90%, 13.78%, 13.72%, 13.34%, 13.14%, 13.05%, and 10.52%,  against JPY, AED, SAR, CHF, GBP, CNY, and EUR, respectively. 

Meanwhile, the currency lost 8.2 rupees to the Pound Sterling as the day's closing quote stood at PKR 292.41 per GBP, while the previous session closed at PKR 284.19 per GBP.

Similarly, PKR's value weakened by 5.5 rupees against EUR which closed at PKR 244.79 at the interbank today.

On another note, within the money market, the overnight repo rate towards the close of the session was 15.00/15.10%, whereas the 1-week rate was 14.95/15.05%.

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