- Closes at 175.72 in inter-bank market on Tuesday
A day after hitting a record low, Pakistan's rupee recovered against the US dollar, appreciating 0.27% in the inter-bank market on Tuesday.
As per the State Bank of Pakistan (SBP), the PKR closed at 175.72 against the USD after a day-on-day appreciation of 48 paisas or 0.27%. On Monday, the rupee had closed at 176.20 against the dollar in the inter-bank market, its weakest level that beat the 175.73 it hit on November 12, 2021.
However, even after the minor gain, Pakistan rupee has lost over 9% in calendar year 2021, and nearly 13.5% since its recent high recorded in May this year.
The gain on Tuesday came after Pakistan and Saudi Arabia signed the agreement for $3-billion fund deposit.
“SFD agreed to place $3 billion, 1-year deposit that will push SBP Net Reserves higher after receiving funds," said Asad Rizvi, former Treasury Head-Chase Manhattan Bank, in a twitter post.
The SBP on Monday signed the agreement with the Saudi Fund for Development (SFD) for a deposit of $3 billion to build Pakistan’s foreign exchange reserves.
A formal deposit agreement was signed between the two parties after approval from the federal cabinet.
Meanwhile, Rizvi also expressed concern that the rebound in oil prices would not work in Pakistan's favour. “But oil after dropping 11% has recovered 4%. Bounce back does not suit (Pakistan), as it will add pressure on the balance of payments. Further, the trend will depend on the OPEC announcement,” he added.
Oil prices climbed on Tuesday after last week's plunge on growing uncertainty over the severity of the Omicron coronavirus variant.
Brent crude futures climbed 43 cents, or 0.6%, to $73.91 a barrel at 0418GMT (0918 PST) after gaining 1% on Monday. US West Texas Intermediate (WTI) crude futures jumped 73 cents, or 1%, to $70.68 a barrel, adding to a 2.6% rise on Monday.
Samiullah Tariq, Head of Research and Development at Pakistan Kuwait Investment Company Limited, while talking to a private channel said Pakistan, in the last four months alone, has imported $6 billion worth of petroleum products, which includes LNG, crude oil and others.
"Last month we purchased $1.6 billion worth of POL products. This translates into over $19 billion worth of imports in a year, as compared to $10 billion imported in the previous year.”
Elaborating the impact of a price-decrease, Tariq said that if the rate declines by $5 on average in a year, this "allows our import bill to reduce by $1.1-1.2 billion. Domestically speaking, a $5 reduction in oil prices leads to decline in POL rates by Rs7-8, and 0.36% reduction in inflation rate.”
Tariq said that in the coming months till March, oil prices could decline in a sustained level as production is increasing amid resumption of economic activity.
Inter-bank market rates for dollar on Tuesday
BID Rs 175.72
OFFER Rs 175.82
In the open market, the PKR gained 30 paisas for buying and 10 paisas for selling against USD, closing at 177 and 177.70, respectively.
Against Euro, the PKR lost 1.60 rupees for both buying and selling, closing at 198.10 and 200, respectively.
Against UAE Dirham, the PKR gained 30 paisas for both buying and selling, closing at 49.51 and 50, respectively.
Against Saudi Riyal, the PKR remained unchanged for both buying and selling, closing at 46.50 and 46.95, respectively.
Open-market rates for dollar on Tuesday
BID Rs 177
OFFER Rs 177.70