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Rupee closes at 228.8 after biggest day-on-day appreciation against US dollar

  • In absolute terms, currency strengthens Rs9.58 in inter-bank market
  • Gain comes as Pakistan completes IMF conditions and import payments' pressure subsides
Published August 3, 2022
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Pakistani rupee witnessed a massive recovery on Wednesday, registering its biggest day-on-day increase against the US dollar in absolute terms to close at 228.8. The significant recovery in the inter-bank market comes after the International Monetary Fund's (IMF) statement citing that Pakistan has managed to meet all pre-conditions for disbursement of the next tranche of its bailout programme.

Additionally, pressure due to import payments subsided, while Pakistan also reported a much narrower trade deficit for July, taking off some pressure on the currency that saw its worst monthly performance in over 50 years in July.

At the end of the session, the rupee closed at 228.8, an appreciation of Rs9.58 or 4.19% against the greenback, according to the State Bank of Pakistan (SBP). On Tuesday, the rupee had settled at 238.38.

In intra-day trading on Wednesday, the currency had dropped as low as 226.49.

A day ago, the IMF stated that Pakistan has met all prior conditions for the combined 7th and 8th review under the Extended Fund Facility (EFF).

Pakistan has met last prior action, says IMF after govt increases petroleum levy

"With the increase in petroleum development levy (PDL), Pakistan has completed the last prior action for the combined seventh and eighth review," said the IMF, adding that the board meeting is tentatively planned for late August once adequate financing assurances are confirmed.

After the Board’s approval, Pakistan will receive around $1.177 billion.

Intra-day update: Stocks get boost, KSE-100 up nearly 850 points

“By the end of August, it is expected that Pakistan will get a $1.2 billion tranche under the EFF programme as all prior actions are met,” said Trust Securities and Brokerage Limited in a note on Wednesday.

“Hence, it is expected that the market is likely to consolidate.

“The relative consolidation is also expected in forex markets after a continued drop in imports and anticipated correction in demand going forward, subject to the revival of the IMF programme and relative political clarity,” it added.

Tahir Abbas, Head of Research at Arif Habib Limited (AHL), told Business Recorder that the pressure of import payments had subsided, leading to a drop in demand for the dollar.

"This is a supply-demand phenomenon as the demand for dollars has reduced amid a drop in import payments, whereas exporters too, are releasing their proceeds, leading to improvement in inflows," said Abbas.

He said the appreciation momentum could continue in the coming days as well, as government measures to curb the import of bill have resulted in positivity. "Rupee may appreciate to 205-210 in this month," he added.

Exchange Companies Association of Pakistan (ECAP) General Secretary Zafar Paracha said the development comes as the "central bank took measures to curb speculation".

“The government and the central bank have taken initiatives to curb smuggling, which is bearing fruit,” Paracha told Business Recorder. "Meanwhile, oil and edible oil imports have also declined, which takes pressure off the currency."

Paracha said the market could see further improvement after the IMF’s disbursement.

Inter-bank market rates for dollar on Wednesday

BID Rs 228

OFFER Rs 230

Open-market movement

In the open market, the PKR gained 11.50 rupees for both buying and selling against USD, closing at 227 and 229, respectively.

Against Euro, the PKR gained 18 rupees for buying and 17.80 rupees for selling, closing at 226 and 228 respectively.

Against UAE Dirham, the PKR gained 3.50 rupees for both buying and selling, closing at 61.50 and 62, respectively.

Against Saudi Riyal, the PKR gained 3 rupees for both buying and selling, closing at 60 and 60.50, respectively.

Open-market rates for dollar on Wednesday

BID Rs 227

OFFER Rs 229

Comments

Comments are closed.

Rana Saddam Aug 03, 2022 01:23pm
Hahahaha
thumb_up Recommended (0)
MKA Aug 03, 2022 02:46pm
There seems to be more than what meets the eye. Now that the green back can't find it's feet. This matter be investigated and those who did the disservice to my country be bought to book. Prices of items affected should be rolled back. Pakistan Zindabad
thumb_up Recommended (0)
samir sardana Aug 03, 2022 04:01pm
AS I SAID ON "https://www.brecorder.com/news/40189584/pakistans-oil-sales-drop-26-to-14mn-tons-in-july-2022" 21 hours ago "USD AND OII,,UNDER PRESSURE = SALVATION FOR PAKISTAN PKR IS SET TO RISE.: --- AND A SPECTACULAR RALLY HAS BEGUN ---- AS I SAID ON "https://www.brecorder.com/news/40188482/pakistans-current-account-deficit-hits-228bn-in-june-up-59-month-on-month",2 DAYS AGO "FROM 28TH,THE PKR WILL START STRENGTHENING !" AND THE PKR APPRECIATION HAS BEGUN ! dindooohindoo HAPPY DAYS ARE HERE AGAIN !
thumb_up Recommended (0)
samir sardana Aug 03, 2022 04:04pm
As I said on "https://www.brecorder.com/news/40189354/pkr-is-the-worst-over" 2 DAYS AGO "IF SBP INTERVENES NOW - WITH THE IMF MONEY due - THERE COULD BE A HISTORICAL RISE IN THE PKR" WILL THIS BE THE "HISTORIC RISE OF THE PKR" ? EPOCHAL AND W/O PRECEDENT ? WILL IT BE SHARPEST RISE OF ANY FX EVER ?
thumb_up Recommended (0)
Malik Afaq Aug 03, 2022 04:36pm
@samir sardana, I hope there could be many more sharper rises ahead.
thumb_up Recommended (0)
Shabbir Kazmi Aug 03, 2022 04:50pm
I suspect some 'ruthless' people were behind massive depreciation of rupee. Now they are taking credit of corrective policies supporting Rupee.
thumb_up Recommended (0)
Omar Qureshi Aug 03, 2022 05:14pm
Hope the local currency maintains the recovery trend
thumb_up Recommended (0)
FCA Aug 03, 2022 05:24pm
Credit to the Miftah and Government. Landmines of previous regime dismantled, peak oil pressures handled and speculators actions also tackled. Keep up the good work and get us back on track inshaAllah
thumb_up Recommended (0)
Sajjadali Aug 04, 2022 10:02pm
15 Agust price dollar
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