March 22, 2023 (MLN): The Pakistani rupee (PKR) continued to show resilience against the mighty dollar in the second consecutive session as it appreciated by 72 paisa against US dollar in today's interbank session to settle the trade at PKR 283.2 per USD compared to the previous close of PKR 283.92 per USD.
Throughout today’s session, the local unit traded in a band of 85 paisa, showing an intraday high bid of 283.85 and low offer of 283.25 while in the open market, PKR was traded at 282.5/285.5 per USD.
Despite reporting minor gains in two consecutive sessions, the domestic unit is still under the pressure of economic and political melancholy.
Speaking to Mettis Link News, Fahad Rauf, Head of Research at Ismail Iqbal Securities said, "There is certainly pressure on rupee, given delay in IMF program."
Even if the program is back on track, it would be difficult for rupee to recover, given the low reserves and challenging global and domestic economic environment, he added.
Meanwhile, Arsalan Siddqui, Head of Research at Optimus Capital Management is of the view that economic pressure does not look like resolving. Even if the IMF SLA is signed, the issue of foreign exchnage reserves may not be sorted as current IMF program is expiring on June-23. The issue will continue in CY23.
The near term breather will be friendly countries commitments and political assurances that will guide the current IMF program, he noted.
The much needed IMF tranche is pending since November 2022 and every passing day increases the likelihood of default.
Pakistan has $7 billion in external debt repayments due by June and a $1.2bn hole in its current account to fill from March to June.
The government assumed that it will be able to roll over $4bn of its debt – and squeeze by with its small reserve cushion.
However, there's no guarantee that other creditor nations, including Saudi Arabia, that have pledged to support Pakistan will agree to roll over their loans.
In FYTD, PKR lost 78.34 rupees or 27.67%, while it plummeted by 56.76 rupees or 20.04% against the USD in CYTD. On the other hand, within the last seven sessions, the local unit moved down by 0.12%, as per data compiled by Mettis Global.
Meanwhile, the currency gained 9 paisa against the Pound Sterling as the day's closing quote stood at PKR 347.65 per GBP, while the previous session closed at PKR 347.75 per GBP.
On the other hand, PKR's value weakened by 33 paisa against EUR which closed at PKR 305.2 at the interbank today.
On another note, within the money market, the overnight repo rate towards close of the session was 20%/20.25%, whereas the 1-week rate was 19.35%/19.45%.
Copyright Mettis Link News
Posted on: 2023-03-22T17:03:21+05:00
