PKR surges by 5 rupees against USD in open market

October 09, 2023 (MLN): The Pakistani rupee (PKR) continues its winning spree, surging by 5 rupees against the US Dollar in the open market, currently being quoted at 275/279 per USD [11:16am PST].

Moreover, in the interbank bank market, the currency has gained around 1 rupee against the US dollar during intraday trade compared to the previous closing of PKR 282.68 per USD.

The local unit was quoted at PKR 281.61/281.72 [11:16 am PST] with the trades being reported at 281.4 per USD.

To address the issue of Afghan transit trade, Pakistan's Ministry of Commerce recently took a decisive step by imposing a ban on 212 items that were previously being imported into Afghanistan via Pakistan under the Afghan transit trade agreement.

This move, made through a Statutory Regulatory Order (SRO) issued on October 03, was in exercise of the powers conferred by the Imports and Exports (Control) Act, 1950.

Additionally, the FBR has imposed a 10% processing fee on five major categories of Afghan transit commercial goods imported into Afghanistan through Pakistan.

It is pertinent to note that the local unit had finished the month of September marked by second-best performance since 2014 in percentage terms, gaining 6.19% against the US dollar and earning the coveted title of the best-performing currency in the world for the month.

In stark contrast to the bleak macros that had plagued the Pakistani rupee, the army-backed crackdown on the illegal dollar trades has significantly helped the PKR.

Moreover, recent reforms introduced by the State Bank of Pakistan (SBP) to consolidate and transform various types of exchange companies into a single category with a well-defined mandate and higher capital requirements are also enhancing transparency.

To note, SBP suspended the authorization of four exchange companies in September, underscoring the central bank's commitment to ensuring compliance with regulatory standards.

These reforms also apply to the banks actively engaged in foreign exchange business, mandating them to set up wholly owned ECs to address the legitimate foreign exchange needs of the general public.

Following the guidelines of the central bank, certain banks such as; Bank Al Falah Limited (BAFL), Faysal Bank Limited (PSX: FABL),  Allied Bank Limited (PSX: ABL), Bank Al Habib Limited (PSX: BAHL), MCB Bank Limited (PSX: MCB), Meezan Bank Limited (PSX: MEBL), and United Bank Limited (PSX: UBL), have decided to establish their own exchange company.

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