- Closes at 174.3 in inter-bank market on Tuesday
The rupee appreciated for the second consecutive day against the US dollar, gaining another 0.27% in the inter-bank market on Tuesday.
As per the State Bank of Pakistan (SBP), the PKR closed at 174.30 against the USD after a day-on-day appreciation of Rs0.47 or 0.27%. The gain comes after PKR appreciated by Rs0.47 or 0.27% on Monday as well.
The gains come after Pakistan finally reached a staff-level agreement with the International Monetary Fund (IMF) on Monday, providing much-needed clarity to the currency market.
Completion of the review would make available SDR 750 million (about $1,059 million), bringing total disbursements under the Extended Fund Facility (EFF) to about $3,027 million, said the IMF in a statement.
“The uncertainty over the IMF front is over — there is also a clear position on the discount rate, which has created clarity on the macroeconomic end,” Sana Tawfik, an analyst at Arif Habib Limited (AHL), told Business Recorder.
The analyst expected more room for appreciation for the PKR, amid an anticipated drop in the Real Effective Exchange Rate (REER), “which is expected to be around 93-95.”
She added that successful negotiations with the IMF would unlock funds from other international lenders including the Asian Development Bank (ADB) and World Bank, “to the tune of $1.4 billion, which will ease off pressure on the rupee.”
Speaking on the interest rate, Tawfik said the higher-than-expected hike will renew interest in the bond sector.
On Friday, the SBP raised its key interest rate by 150bps, a measure taken to curb accelerating inflation, controlling the widening current account deficit, and supporting the rupee against the US dollar.
The analyst highlighted that the government needs to take measures to curtail imports, and reduce the widening current account deficit.
Inter-bank market rates for dollar on Tuesday
BID Rs 174.25
OFFER Rs 174.35
In the open market, the PKR lost 10 paisas for both buying and selling against USD, closing at 176 and 177, respectively.
Against Euro, the PKR gained one rupee for both buying and selling, closing at 197 and 198.50, respectively, reversing Monday’s loss.
Against UAE Dirham, the PKR gained 10 paisas for both buying and selling, closing at 49.70 and 50.20, respectively.
Against Saudi Riyal, the PKR remained unchanged for buying while gaining 15 paisas for selling, closing at 46.40 and 46.70, also reversing Monday’s movement.
Open market rates for dollar on Tuesday
BID Rs 176
OFFER Rs 177