- Closes at 175.29 in inter-bank market
After an entire week of losses, Pakistan's rupee finally ended with a gain against the US dollar, appreciating 0.25% at the inter-bank market on Monday.
As per the State Bank of Pakistan (SBP), the PKR closed at 175.29 against the USD after a day-on-day appreciation of Rs0.44 or 0.25%. The improvement comes after the rupee depreciated to its lowest historic level of 175.73 in the inter-bank market on Friday.
Still, the PKR has lost nearly 14% of its value against the US dollar in around six months.
“The recent appreciation comes amid ease in the dollar index,” Saad Khan, Head of Equities at IGI Securities, told Business Recorder.
Khan was of the view that the abrupt devaluation of PKR against USD last week was due to a rise in the dollar index, which hit 95.266 for the first time since July 2020.
On Monday, the dollar eased 0.13% to 95.012 from Friday.
“Inflation in the US hit 6.2%, the highest in over 30 years, after which the Fed announced to continue bond-buying, which led to increase in demand for the dollar,” Khan explained. He said that due to the rise in demand for dollar, its value increased against currencies including PKR.
Talking about SBP's latest move to increase the average Cash Reserve Requirement (CRR), Khan said that the measure is a tool used to curb inflation.
"However, it will not have much impact on the PKR/USD parity owing to its low multiplier effect," he said.
The central bank on Saturday announced to raise CRR to be maintained during a period of two weeks by scheduled banks, from 5% to 6%, and minimum CRR to be maintained each day from 3% to 4%, and is applicable on demand liabilities and time liabilities with tenor of less than a year.
"In recent months, real money supply growth has drifted above its trend,” said SBP, which was of the view that its measure will “moderate this growth as well as domestic demand, thereby helping to sustain the current economic recovery, achieve the government’s medium-term inflation target, and reduce pressures on the rupee”.
Meanwhile, Advisor to the Prime Minister on Finance and Revenue Shaukat Tarin on Sunday held speculators responsible for the most-recent devaluation of the PKR.
“We are tightening the noose around them,” he said while addressing an event in Karachi.
He said the Pakistani currency was undervalued by up to at least eight rupees, adding that we have reached the final stage of the deal with the International Monetary Fund (IMF), and soon the country would receive good news in this regard.
Tarin said the rupee would bounce back when the IMF loan programme is finalised.
Inter-bank market rates for dollar on Monday
BID Rs 175.29
OFFER Rs 175.39
In the open market, the PKR remained unchanged for buying while gaining 20 paisas for selling against USD, closing at 177 and 177.80, respectively.
Against Euro, the PKR gained 2 rupees for both buying and selling, closing at 200 and 202, respectively.
Against UAE Dirham, the PKR lost 40 paisas for both buying and selling, closing at 50.30 and 50.80, respectively.
Against Saudi Riyal, the PKR gained 10 paisas for buying and 5 paisas for selling, closing at 46.50 and 46.95, respectively.
Open-market rates for dollar on Monday
BID Rs 177
OFFER Rs 177.80