PKR steals show on IMF's hopeful breeze in Feb

February 28, 2023 (MLN): The Pakistani rupee (PKR) has outshined the greenback in 13 of the 20 trading sessions in the month of February, registering a gain of over seven rupees or 2.72% to close the month’s trade at PKR 261.5 per USD.

 Safe to say that the local unit was basking in the optimistic breeze of the IMF's upcoming loan for which the government has left no stone unturned.

However, in the last trading session of the month, the domestic unit snapped a 4-day winning streak by 1.6 rupees against yesterday's closing of PKR 259.92 per USD on the back of a delay in funding despite the government’s efforts.

Throughout today’s session, the local unit traded in a band of two rupees, showing an intraday high bid of 261.5 and low offer of 260 while in the open market, PKR was traded at 264/266.5 per USD.

In a major breakthrough, the forthcoming meeting of the Monetary Policy Committee (MPC) has been preponed to March 02, 2023, from its previously scheduled date of March 16, 2023.

The decision comes in line with the expectations of market participants who had anticipated an emergent MPC meeting to raise the policy rate and unlock the IMF deal.

The central bank's announcement has been well-received by the majority of individuals who participated in a recent poll conducted by Mettis Link News. The poll suggested that the policy rate might be increased by 200 basis points to 19%.

The central bank's decision to hold an emergent MPC meeting may prove to be a significant step in reaching the much-needed IMF deal.

During the month, the State Bank of Pakistan (SBP) received $700 million from China.

This loan from China is part of a series of financial assistance packages that the country has received from its close ally in recent years. With this loan, Pakistan will be able to boost its reserves and work towards economic stability in the long run.

At present, the foreign exchange reserves held by the central bank stood at $3.25 billion, up by $65.6 million or 2.05% WoW during the week ended on February 17, 2023, marking the second consecutive increase on weekly basis, according to the data released by the central bank on Thursday.

In FYTD, PKR lost 56.65 rupees or 21.67%, while it plummeted by 35.07 rupees or 13.41% against the USD in CYTD. On the other hand, within the last seven sessions, the local unit moved up by 0.39%, as per data compiled by Mettis Global.

Meanwhile, the currency lost 4 rupees to the Pound Sterling as the day's closing quote stood at PKR 314.84 per GBP, while the previous session closed at PKR 310.79 per GBP.

Similarly, PKR's value weakened by 2.9 rupees against EUR which closed at PKR 277.22 at the interbank today.

On another note, within the money market, the overnight repo rate towards the close of the session was 17.25%/17.5%, whereas the 1-week rate was 17.2%/17.3%.

Copyright Mettis Link News