Pakistani rupee (PKR) continues its winning streak for the 9th consecutive week, appreciating by 1.04 rupees against the US dollar. The local unit settled at PKR 280.36, a significant improvement from the previous week’s closing of PKR 281.4 per USD.

During today’s trading session, the PKR gained 75.4 paisa, reaching an intraday high bid of 279 and a low ask of 281.5. In the open market, Exchange Companies quoted the dollar at 279.15 for buying and 281.50 for selling.

The stability of the home unit can be attributed to increased liquidity in the foreign exchange market. This is a result of tighter enforcement of regulations, a shrinking money supply, a balance of payments surplus due to low import demand, and a moratorium on Chinese debt repayments.

A significant development further boosting confidence is the successful conclusion of the first review of Pakistan’s economic reform program by the Executive Board of the International Monetary Fund (IMF). The approval of the program unlocks an immediate disbursement of SDR 528 million (around $700 million), bringing the total disbursements under the Stand-by Arrangement (SBA) to a substantial $1.9 billion.

Investor confidence in the economy has surged, contributing to the continuous appreciation of the PKR against the US dollar. However, the IMF emphasizes that while economic activity has stabilized, the outlook remains challenging and depends on the implementation of sound policies.

PKR AGAINST MAJOR CURRENCY PAIRS

In comparison to major currencies, the PKR gained 78.58 paisa against the Euro, closing at 307.85, and the British Pound became cheaper by 58.38 paisa, closing at 358.18. The Swiss Franc saw losses of 1.41 rupees, closing at 329.08, while the PKR lost 0.09 paisa against the Japanese Yen, closing at 1.934. The Chinese Yuan lost 12.33 paisa, closing at 39.1391, the Saudi Riyal closed at 74.75 with a loss of 20.5 paisa, and the U.A.E Dirham decreased by 20.64 paisa.

Throughout the current financial year, the PKR has appreciated against the dollar by 5.63 rupees or 2.01%, and in the current calendar year, it has appreciated by 1.5 rupees or 0.54%.

In the Money Market, the benchmark 6-month Karachi Interbank Bid and Offer rates slightly decreased by 6 basis points to 20.67% and 20.92%. Additionally, the State Bank of Pakistan (SBP) injected a total of Rs6 trillion into the market through a reverse repo and Shariah Compliant Modarabah-based Open Market Operation (OMO), with Rs5.79 trillion through reverse repo OMO and the remaining Rs210 billion through Shariah-compliant Modarabah-based OMO.

CORRELATION FOR CURRENCY

Meanwhile, as of January 5, the foreign exchange reserves held by the State Bank of Pakistan stand at $8.15 billion and are poised for an impending boost.

Internationally, the US dollar maintained stability against its counterpart currencies on Friday, with investors assessing higher-than-expected US consumer price inflation against market expectations of a Federal Reserve rate cut as early as March.

In December, US consumer prices saw an increase, driven by a continued uptrend in rents, rising 0.3% for the month and registering an annual growth of 3.4%. This surpassed economists’ predictions in a Reuters poll, which anticipated a 0.2% gain and a 3.2% rise, respectively.

Despite this, traders are factoring in a 73.2% probability for the first 25 basis point cut to occur in March, with expectations for additional cuts afterward, according to the CME Group’s FedWatch Tool.

The dollar index hovered around 102.26, slightly lower than Thursday’s high of 102.76 but well above the five-month low of 100.61 reached in December when traders aggressively priced in multiple Fed cuts for the year.

On Friday, oil prices, a significant indicator of currency parity, surged over 2.5% following air and sea strikes by the United States and Britain on Houthi targets in Yemen. This response was prompted by attacks from the Iran-backed group on shipping in the Red Sea.

The market responded with heightened concerns about the potential repercussions of a broader conflict in the Middle East, particularly on oil supplies from the region, notably those traversing the critical Strait of Hormuz.

OIL PRICES AS INDICATOR

CFDs on WTI Crude Oil posted an intraday high of $80.72 and intraday low of $78.23. Oil is currently trading at $79.43 (8:22pm Friday, 12 January 2024 (GMT+5) Time in Pakistan).

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CFDs on Brent Crude oil posted an intraday high of $75.21 and intraday low of $72.93. Oil is currently trading at $73.94 (8:22pm Friday, 12 January 2024 (GMT+5) Time in Pakistan).

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USOIL_2024-01-12_20-23-02

 

 

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