- Some intra-day gains erased after dollar strengthens
Pakistan’s rupee settled with a marginal gain against the US dollar in the inter-bank market on Thursday over news that the International Monetary Fund (IMF) finally reached the staff-level agreement with Islamabad, paving way for an inflow of $1.17 billion.
As per the State Bank of Pakistan (SBP), the rupee settled with a gain of 0.14% or 30 paisas to close at 209.8.
The rupee had earlier recovered to the 208.7 level, but lost some of its intra-day gains.
The appreciation comes after the IMF earlier on Thursday said it reached a staff-level agreement (SLA) with Pakistan authorities.
“Subject to Board approval, about $1,177 million (SDR 894 million) will become available, bringing total disbursements under the programme to about $4.2 billion,” said the IMF in its statement.
Nathan Porter, who led the IMF team in the discussions, also said that in order to support programme implementation and meet the higher financing needs in fiscal year 2022-23, as well as catalyse additional financing, the IMF Board will consider an extension of the Extended Fund Facility (EFF) until end-June 2023 and an augmentation of access by SDR 720 million that will bring the total access under the EFF to about $7 billion.
Commenting on the development, Zafar Paracha, secretary general of the Exchange Companies Association of Pakistan, attributed the rupee’s intra-day losses to “speculation and manipulation” in the currency market.
“Banks are also involved in speculation, as such volatility should not occur in the currency,” he told Business Recorder.
“Both sellers and buyers in the market are concerned over the ongoing situation, as everything is happening on an adhoc basis,” said Paracha, adding that the government and the central bank should intervene, as volatility is hampering the confidence of investors.
On the IMF programme, Paracha said the currency should improve by Rs2-5.
“However, there is a need to take tough decisions, such as imposition of an economic emergency, and measures to curb imports and introduce fiscal discipline,” he said.
Meanwhile, Saad Khan, Head of Research at IGI Securities, said the intra-day losses suffered by the rupee is due to the rise of the dollar index.
The dollar has seen a relentless rise in recent days, charting new 24-year highs against the yen and pinning the euro close to parity, as investors bet on the Federal Reserve ratcheting up interest rates to combat soaring inflation.
Global economic turmoil has put a rocket under the safe haven dollar, pushing the dollar index that tracks the greenback against six counterparts up more than 13% this year. It was last up a fifth of a percent on the day at 108.500.
“Dollar index is at historical high, with USD almost closing parity with Euro,” said Khan. “This is being played out at the domestic market as well,” he said.
Inter-bank market rates for dollar on Thursday
BID Rs 210
OFFER Rs 210.30
In the open market, the PKR gained one rupee for both buying and selling against USD, closing at 208.50 and 210.50, respectively.
Against Euro, the PKR gained one rupees for both buying and selling, closing at 208 and 210, respectively.
Against UAE Dirham, the PKR gained 50 paisas for both buying and selling, closing at 56.30 and 56.80, respectively.
Against Saudi Riyal, the PKR gained 20 paisas for buying and 30 paisas for selling, closing at 54.80 and 55.20, respectively.
Open-market rates for dollar on Thursday
BID Rs 208.50
OFFER Rs 210.50