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PKR soars against US dollar, up by 6.5 rupees in a week

Repatriation of profit surges to $759.2m in 8MFY24
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February 17, 2023 (MLN): Since Pakistan is moving closer to the stalled IMF tranche, the Pakistani rupee (PKR) has registered a significant gain of 6.5 rupees per US dollar in five consecutive sessions to settle the week at PKR 262.82 per USD, compared to the previous week’s close of PKR 269.28 per USD.

Within today’s session, the currency has appreciated by 1.6 rupees against the greenback with quotes being recorded in a range of 2.1 rupees per USD showing an intraday high bid of 264.10 and an intraday low offer of 262.50.

Within the open market, PKR was traded at 263/266 per USD.

Pakistan is currently facing historic lows in its foreign exchange reserves, which can be attributed to political upheaval and delays in crucial decision-making processes to unlock the IMF deal.

However, after witnessing a continuous decline for the last three weeks, the foreign exchange reserves held by the State Bank of Pakistan (SBP) inched up by $276 million to $3.19 billion during the week ended on February 10, 2023, according to the data released by the central bank on Thursday.

Last week, the SBP's foreign exchange reserves had dropped by $170mn to a critically low level of $2.92bn, reflecting the urgent need for Pakistan to complete the next review of the IMF.

Despite having been valued at nearly $18bn at the beginning of 2022, the central bank's reserves have endured a substantial reduction in the preceding months.

Finally, realizing the importance of the decisions, the government is currently on its toes to comply with all IMF conditions.

Taking the bold step, the Federal Minister for Finance and Revenue presented the Finance Bill on Wednesday in National Assembly.

As per this, the minister announced several proposed amendments, including an increase in federal excise duty on cigarettes and fizzy drinks, and an increase in federal excise duty on cement from Rs1.5/kg to Rs2/kg. The General Sales Tax (GST) is also increased from 17% to 18%.

The government has also hiked the petroleum prices for the next fortnightly by over Rs22 per litre.

Furthermore, the Oil and Gas Regulatory Authority (OGRA) notified a massive surge in prices by up to 112.3% for domestic users.

These decisions, undoubtedly, were the most difficult decision for the coalition government in the political landscape of Pakistan but much needed to close the deal with the fund.

In FYTD, PKR lost 57.96 rupees or 22.06%, while it plummeted by 36.38 rupees or 13.84% against the USD in CYTD. On the other hand, within the last seven sessions, the local unit moved up by 2.46%, as per data compiled by Mettis Global.

Meanwhile, the currency gained 5.3 rupees against the Pound Sterling as the day's closing quote stood at PKR 313.34 per GBP, while the previous session closed at PKR 318.66 per GBP.

Similarly, PKR's value strengthened by 3.4 rupees against EUR which closed at PKR 279.82 at the interbank today.

On another note, within the money market, the overnight repo rate towards the close of the session was 16.5%/16.75%, whereas the 1-week rate was 16.55%/16.65%.

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Posted on: 2023-02-17T17:26:39+05:00