The Pakistani Rupee (PKR) has shown an appreciable gain against the US Dollar (USD) in the recent interbank session, marking a significant movement in the forex market. On Tuesday, the PKR strengthened to PKR 279.79 per USD, an improvement from the previous session’s close of PKR 279.85 per USD. This development signals a positive trend for the Pakistani economy in the global financial landscape.

INTRADAY FLUCTUATIONS

The currency experienced an intraday high bid of 280 and a low ask of 279.75. In the open market, the dollar was quoted at 280 for buying and 281 for selling, illustrating the dynamic nature of the forex market.

IMPACT OF IMF’S SECOND INSTALMENT

Pakistan recently received a crucial second installment of SDR 528 million (approximately $705.6m) from the International Monetary Fund (IMF). This financial support is part of a broader framework to stabilize and strengthen the country’s economic standing.

IMF’S STANDBY ARRANGEMENT AND GOVERNMENT STRATEGIES

The IMF’s first review report under the Standby Arrangement emphasized the importance of a market-determined exchange rate and the need for a gradual deepening of the foreign exchange market. The Pakistani government and the State Bank of Pakistan (SBP) have agreed to several key measures:

  • Refraining from formal or informal restrictions on the exchange rate.
  • SBP’s interventions in the FX(Forex) market will focus on building foreign exchange buffers, avoiding measures that prevent the rupee’s trend depreciation driven by market fundamentals.
  • Elimination of existing exchange restrictions and multiple currency practices is on the agenda for early 2024.
  • Reforms in the Exchange Companies (EC) sector to enhance oversight, governance, and transparency.
  • Development of a new trading platform for spot transactions, connecting all banks, scheduled to go live by end-January 2024.

SBP’S ROLE AND FUTURE PLANS

SBP is committed to implementing an effective exchange rate policy and is developing a framework to monitor informal market pricing. This includes a feasibility study for conducting foreign exchange purchases and sales via auctions, with the publication of results expected by the end of March 2024.

PERFORMANCE AGAINST MAJOR CURRENCIES

The PKR’s performance against major currencies showed mixed results:

  • Lost 18.84 paisa against the Euro, closing at 305.03.
  • British Pound became more expensive by 1.02 rupees, closing at 356.34.
  • Gains against the Swiss Franc by 54.58 paisa, closing at 322.62.
  • Loss against the Japanese Yen by 0.98 paisa, closing at 1.8993.
  • Gain against the Chinese Yuan by 13.91 paisa, closing at 39.03.
  • Loss against the Saudi Riyal by 1.35 paisa, closing at 74.6.
  • Slight decrease against the U.A.E Dirham by 1.48 paisa, closing at 76.19.

FINANCIAL YEAR AND CALENDAR YEAR APPRECIATION

During the current financial year, the PKR has appreciated against the Dollar by 6.2 rupees or 2.22%. The current calendar year has witnessed a 2.07 rupee or 0.74% appreciation.

MONEY MARKET DYNAMICS

In the Money Market, the benchmark 6 Month Karachi Interbank Bid and Offer rates saw an increase by 2 basis points to 20.6% and 20.85% respectively.

CONCLUSION

The recent appreciation of the PKR against the USD is a positive sign for Pakistan’s economic stability. Continuous efforts by the government and SBP, along with international support, are crucial in maintaining this momentum and ensuring long-term financial stability.

 

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