The Pakistani rupee (PKR) appreciated by 6.79 paisa against the US dollar in Tuesday’s interbank session, closing at PKR 278.30 per USD, compared to the previous session’s closing of PKR 278.36 per USD. During the session, the rupee saw an intraday high (bid) of 278.55 and a low (ask) of 278.35.
In the open market, exchange companies quoted the dollar at 277.18 for buying and 279.54 for selling. Despite not registering significant gains, the rupee has successfully maintained stability against the US dollar for another month, reflecting stable economic operations. The rupee ended May at 278.33 per USD, showing a minimal drop of 1 paisa from the previous month’s closing rate of 278.31 per USD.
IMF Agreement and Economic Stability
The successful conclusion of the 9-month Stand-By Arrangement (SBA) with the International Monetary Fund (IMF) has been a key factor in the persistent stability of the Pakistani rupee. The agreement provided a policy anchor, helping to eliminate foreign exchange shortages and restore proper functioning of the FX market.
Inflation and Interest Rates
Official data showed that consumer price gains eased to 11.8% year-on-year (YoY) in May, lower than economists’ forecasts. This has strengthened bets that the State Bank of Pakistan (SBP) might shift away from its “higher-for-longer” stance on interest rates, potentially leading to a decline in the Real Effective Exchange Rate (REER) index.
Performance Against Major Currencies
- Euro: PKR lost 1.16 rupees, closing at 302.84 compared to the previous value of 301.68.
- British Pound: PKR depreciated by 1.75 rupees, closing at 355.61 compared to 353.86.
- Swiss Franc: PKR saw a decrease of 2.46 rupees, closing at 310.89 compared to 308.44.
- Japanese Yen: PKR lost 1.99 paisa, closing at 1.7916 compared to 1.7717.
- Chinese Yuan: PKR saw a minor loss of 0.25 paisa, closing at 38.42 compared to 38.41.
- Saudi Riyal: PKR depreciated by 1.42 paisa, closing at 74.20 compared to 74.21.
- U.A.E Dirham: PKR decreased by 1.44 paisa, closing at 75.78 compared to 75.77.
Overall Performance in Financial Year and Calendar Year
During the current financial year, PKR has appreciated against the dollar by 7.69 rupees or 2.76%. Over the current calendar year, PKR has appreciated by 3.57 rupees or 1.28%.
Money Market Activity
In the Money Market, the benchmark 6-Month Karachi Interbank Bid and Offer rates dropped by 7 basis points to 20.59% and 20.84%, respectively. The State Bank of Pakistan (SBP) conducted an Open Market Operation (OMO), mopping up a total of Rs 177 billion from the market.
