PKR snaps losing streak in interbank market

September 06, 2023 (MLN): The Pakistani rupee (PKR) snaps its losing streak in the interbank market as the currency appreciates by around 60 paisa against the US dollar during intraday trade compared to the previous closing of PKR 307.1 per USD.

The local unit was quoted at PKR 306.52/307.02 [10:12 PST] with the trades being reported at 306.5 per USD.

While in the open market, PKR is being traded at 320/326 per USD, yesterday PKR gained 11 rupees in the open market.

"The strengthening of PKR against USD in the open market can be attributed to the positive news regarding initiatives to be taken to control the smuggling of dollars," said Fahad Rauf, the Head of Research at Ismail Iqbal Securities, while speaking to Mettis Link News.

Additional positivity arises from the news flow regarding the recent meeting of Chief of Army Staff (COAS) Asim Munir with the business community, during which he highlighted the pivotal role of the Special Investment Facilitation Council (SIFC) and emphasized its potential to attract substantial investments of up to $100 billion.

To note, the gap between the interbank and open market is widening due to the removal of restrictions on letters of credit (LCs) which has led to an increased demand for dollars.

Consequently, the pressure on the domestic currency still prevails in the interbank market.

The Staff Report issued by the IMF on July 18, 2023 states that the board will ensure that the average premium between the interbank and open market rate is within 1.25% during any consecutive 5 business day period (continuous SB), once proper market functioning is restored.

During the current financial year, PKR has depreciated against the Dollar by 20.51 rupees or 6.69%. While the current calendar year has seen PKR depreciate by 80.1 rupees or 26.13%.

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