- Currency closes at 172.78 after gain of Rs2.49 in inter-bank market
A multi-billion-dollar financial package announced by Saudi Arabia helped arrest the decline of Pakistan's rupee against the US dollar, as the currency recovered a substantial 1.44% in the inter-bank market on Wednesday.
As per the State Bank of Pakistan (SBP), the PKR closed at 172.78 against the USD, a day-on-day appreciation of Rs2.49 or 1.44%. On Tuesday, the PKR dropped to its lowest level against the US dollar, closing over the 175 level for the first time in the inter-bank market.
This is the biggest day-on-day recovery, in absolute terms, since April 2020, stated AHL Research.
The PKR has been on a losing run since October 18, weakening every day against the US dollar until Wednesday. However, the announcement of Saudi Arabia's support package that included $3 billion in safe deposits and $1.2 billion worth of oil supplies on deferred payments has helped cool off the currency market that has seen the rupee under substantial pressure since May this year.
“This was not expected, and came as a positive surprise for the markets,” Saad Hashemy, executive director at BMA Capital, told Business Recorder.
He added that the financial package would provide much-needed stability to the PKR/USD rates, which could help address rising inflation. “The funds announced would also provide much space to the country’s external buffers,” said Hashmey, adding that this would also improve the country’s economic outlook.
On the other hand, market analysts said that the financial package announced would also help Pakistan in its ongoing negotiations with the International Monetary Fund (IMF), where Islamabad is hoping for the release of a $1-billion tranche under the Extended Fund Facility (EFF).
The Saudi Fund for Development (SFD), on Tuesday night, announced the issuance of the Royal Directive to deposit an amount worth of $3 billion into the central bank of Pakistan, “to help the Pakistani government support its foreign currency reserves and support it in facing the impacts of the coronavirus pandemic,” read a statement by Saudi Press Agency (SPA).
Additionally, the SFD said that the royal directive was also issued to finance the oil derivatives trade with a total amount of $1.2 billion throughout the year.
Meanwhile, Prime Minister Imran Khan thanked Saudi Arabia for the financial support."The Kingdom of Saudi Arabia has always been there for Pakistan in our difficult times, including now when the world confronts rising commodity prices," Khan said in a tweet.
Inter-bank market rates for dollar on Wednesday
BID Rs 172.78
OFFER Rs 172.90
In the open market, the PKR gained 2.30 rupees for buying and 2.20 rupees for selling against USD, closing at 173.30 and 174.20, respectively.
Against Euro, the PKR gained 1.20 rupees for buying and one rupee for selling, closing at 200.50 and 202.50, respectively.
Against UAE Dirham, the PKR gained 80 paisas for buying and 75 paisas for selling, closing at 48.80 and 49.25, respectively.
Against Saudi Riyal, the PKR gained 40 paisas for both buying and selling, closing at 45.80 and 46.25, respectively.
Open-market rates for dollar on Wednesday
BID Rs 173.30
OFFER Rs 174.20