December 17, 2021 (MLN): While struggling to survive on the slippery slope, PKR has once again depreciated by 5 paisa today as the currency closed the week at PKR 178.04 per USD, against yesterday's closing of PKR 177.98.
The rupee traded within the narrow range of 27 paisa per USD showing an intraday high bid of 178.22 and an intraday low offer of 177.95.
It is pertinent to mention that the pace of depreciation has been slower throughout the week as rupee lost only 33 paisa against the greenback.
The external pressure and declining forex have been the major culprit behind the spell of PKR depreciation.
The foreign exchange reserves held by the State Bank of Pakistan (SBP) have dropped by $90 million to stand at $18.56 billion.
The drop confirms that payment exceeds receivables. This is not a very encouraging sign as demand for the dollar is pushing PKR close to all-time lows, Asad Rizvi, the former Treasury Head at Chase Manhattan.
“IMF funding will not be available before 3-weeks while the demand for dollar persists,” he added.
From July’21 to date, the local unit has lost Rs20.49 against the USD. Similarly, the rupee fell by PKR18.20 in CY21, with the month-to-date (MTD) position showing a decline of 1.30%, as per data compiled by Mettis Global.
Meanwhile, the currency lost 92 paisa to the Pound Sterling as the day's closing quote stood at PKR 236.97 per GBP, while the previous session closed at PKR 236.05 per GBP.
Similarly, PKR's value weakened by 33 paisa against EUR which closed at PKR 201.52 at the interbank today.
As per the Exchange Companies Association of Pakistan (ECAP), PKR lost 1.6 rupee for buying and 1.7 rupee for selling over the day closed at 179.80 and 180.50 respectively in the open market.
On another note, within the money market, the State Bank of Pakistan (SBP) conducted two Open Market Operations (OMO) today, in which it injected Rs1.085 trillion and Rs689.35 billion into the market for 7 days and 63 days at 9.82% and 9.90%, respectively.
According to Senior Economist, Ali Khizar, the Governor SBP, Dr. Reza Baqir clearly indicated a pause in January’22 while SBP issued OMO injection for 63 days and 7 days. Both moves will reduce banks’ repricing risk for two months.
“It makes sense to invest more in 3M T-Bills. The auction is on the 30th December 2021. Banks will get cover 49 days of repricing risk. For 3M paper, their risk exposure is 33 days. There is no change in January MPS January’22 and the next policy is on 8th March. For 12 days exposure is covered. Naked exposure is 13 days,” he said.
The overnight repo rate towards the close of the session was 10.50/10.60 percent, whereas the 1-week rate was 9.95/10.05 percent.
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