May 31, 2019 (MLN): May 2019 has observed one of the most significant and eminent round of PKR’s value adjustment phases this year, as the local currency lost a net of Rs.6.63 per US Dollar during the period, to IMF’s bailout deal.
The month opened with PKR valued at Rs.141.29 per USD. It kept hovering very near to this value for two whole weeks until the long overdue bailout package with the IMF was finally agreed upon on May 12th, 2019.
Following this, the rupee gradually started losing value against dollar but this pace was short-lived as it depreciated very quickly over the next few days and touched an all-time low of Rs.151.95 towards the end of the month.
However, the rise in foreign exchange inflows due to Ramadan seem to have arrested the fall of PKR in its tracks but once the month is over, further depreciation is expected.
Reasons to devalue the currency were to promote exports and at the same time discourage imports, mainly because of the wide trade deficit.
Since exports aren’t really growing, it appears that this was simply to discourage imports and narrow down the deficit.
Moreover, the real effective exchange rate shows that the Pakistani rupee is over-valued, which means that the devaluation was inevitable.
In today’s interbank session, the rupee appreciated by 29 paisa against US Dollar (USD) as the currency closed the day at PKR 147.93 per USD, against previous session's closing of PKR 148.21 per USD.
The local currency endured a volatile trading session today, with its value trading within a range of 2.00 Rupee per USD showing an intraday high bid of 149 and an intraday Low offer of 147.5
During the week, PKR has gained 3 rupees against the greenback, as the previous week was concluded at PKR 150.92 per USD.
Meanwhile, the currency gained 50 paisa against Pound Sterling as the day's closing quote stood at PKR 186.69 per GBP, while the previous session closed at PKR 187.19 per GBP.
Similarly, PKR's value strengthened by 12 paisa against EUR which closed at PKR 164.91 at the interbank today.
Within the Open Market, PKR was traded at 148.50/150.00 per USD.
On another note, within the money market, the State Bank of Pakistan (SBP) conducted an Open Market Operation in which it injected Rs.816.4 billion for 10 days at 12.31 percent.
The overnight repo rate towards close of the session was 12.25/12.50 percent, whereas the 1 week rate was 12.30/12.40 percent.
Copyright Mettis Link News