June 07, 2022 (MLN): Riding a downward slide, the Pakistani rupee (PKR) has lost further ground by 2.8 rupees against the greenback in today's interbank session as the currency settled the trade at PKR 202.83 per USD.
During the day, the local unit has endured a highly volatile trading session with quotes being recorded in a range of 2.95 rupees per USD showing an intraday high bid of 203.35 and an intraday low offer of 200.90.
At the same time, the domestic unit was available at 202/203.50 per USD in the open market.
Speak to Mettis Global, Zafar Paracha, President of Exchange Companies Association of Pakistan (ECAP) said that the panic in the market is created by the political leaders who keep stating different scenarios on the policy front. Based on inadequate information, speculators get enough room to maximize their benefits which in turn created another spell of depreciation.
He also suggested that SBP should take prompt measures to arrest the freefall of rupees otherwise, the decline in rupee valuation will remain continue.
It is true that delay in the IMF program is one of the significant reasons behind PKR depreciation, but IMF has not only asked to roll back subsidies, it also demands to curtail fiscal expenditures. Thus, the government should also consider a major slash in expenditure while improving the revenue stream.
In the present situation, the dollar should not be traded in a free market and authorities should fix its price at PKR 192 per USD.
Talking about the outlook of the local unit, he said that PKR would be traded at 165 per USD in long term, he added.
Meanwhile, the Real Effective Exchange Rate (REER) index has dropped to 95.85 in April 2022, down by 0.84% compared to 96.66 in March 2022 implying that PKR is undervalued.
Along with domestic turmoil, the raging oil prices in the international oil market have also been hurting the local currency, Wajid Rizvi, the Head of Economy and Strategy of JS Global told Mettis Global.
From July’21 to date, the local unit has lost Rs45.28 against the USD. Similarly, the rupee fell by Rs26.31 in CYTD, with the month-to-date (MTD) position showing a decline of 2.15%, as per data compiled by Mettis Global.
During the last 52 weeks, PKR lost 23.24% against the greenback while reaching its lowest at 202.82 today and the highest of 155.31 on June 9, 2021.
Furthermore, the local unit has weakened by 13.79% since its high on July 02, 2021, against EUR while, it has dropped by 14.09% against GBP since its high on July 02, 2021.
In addition, the performance of PKR remained bleak in FYTD as it weakened by 22.33%, 22.31%, 19.84%, 17.91%, 13.82%, 13.57%, and 6.60%, against AED, SAR, CNY, CHF, GBP, EUR, and JPY, respectively.
Furthermore, the local unit has weakened by 13.08% since its high on July 02, 2021, against EUR while, it has dropped by 13.46% against GBP since its high on July 02, 2021.
Meanwhile, the currency lost 1.9 rupees to the Pound Sterling as the day's closing quote stood at PKR 252.92 per GBP, while the previous session closed at PKR 251.06 per GBP.
Similarly, PKR's value weakened by 1.8 rupees against EUR which closed at PKR 216.66 at the interbank today.
On another note, within the money market, the overnight repo rate towards the close of the session was 13.00/13.50 percent, whereas the 1-week rate was 13.75/13.85 percent.
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