The Pakistani rupee (PKR) has marked yet another successful day in the forex market, ascending by 9.32 paisa against the US dollar in Tuesday’s interbank session. The local currency wrapped up the trade at an impressive PKR 279.55, compared to the previous day’s close of PKR 279.64 per USD.

INTRADAY TRADING HIGHLIGHTS

The trading session saw the rupee fluctuate, reaching an intraday high bid of 279.66 and a low ask of 279.6. Meanwhile, in the open market, exchange companies set the dollar’s buying and selling rates at 280 and 281, respectively.

CENTRAL BANK’S MONETARY POLICY STANCE

The central bank has decided to maintain the policy rate at 22% for the fifth consecutive meeting, which is a significant monetary policy decision. The bank’s ongoing efforts to preserve monetary balance and stabilise the economy are reflected in this decision.

CONSISTENT VICTORIES FOR THE PKR

The Pakistani rupee (PKR) is on a winning streak, with the last week marking its eleventh consecutive victory against the US dollar.

The Pakistani rupee has been bolstered by the receipt of the second installment of SDR 528 million, equivalent to $705.6 million, from the International Monetary Fund (IMF).

This injection of funds has been a key factor in strengthening the foreign exchange (FX) reserves of Pakistan.

IMF’S ROLE IN PAKISTAN’S FOREX MARKET

The IMF’s latest report under the Standby Arrangement emphasizes the importance of market-driven exchange rates and recommends a gradual deepening of the FX market.

The IMF staff and Pakistani authorities agree that the State Bank of Pakistan’s (SBP) interventions should primarily focus on building FX buffers, rather than using sales to counteract the rupee’s depreciation.

GOVERNMENT’S COMMITMENTS AND REFORMS

The Pakistani government has committed to eliminating existing exchange restrictions and multiple currency practices in early 2024. Additionally, the SBP’s planned reforms aim to enhance oversight, governance, and transparency in the Exchange Companies (EC) sector. The government is also finalising preparations for a new trading platform for spot transactions, connecting all banks, which is expected to go live by the end of January 2024.

PAKISTAN TO GET NEW DESIGN FOR NATION’S CURRENCY (PKR)

SBP’S MONITORING FRAMEWORK AND AUCTIONS

The SBP is developing a framework to monitor pricing in informal markets and will publish a report on its findings by the end of March 2024. The government also plans to conduct a feasibility study for conducting FX purchases and sales via auctions, including the publication of auction results.

PKR’S PERFORMANCE AGAINST OTHER MAJOR CURRENCIES

In comparison to other major currencies, the PKR experienced mixed results. It gained 29.66 paisa against the Euro, closing at 302.68. The British Pound and Swiss Franc saw depreciations against the PKR, while there was a minimal loss against the Japanese Yen. The Chinese Yuan and Saudi Riyal also saw slight changes in value.

OVERVIEW OF PKR’S ANNUAL APPRECIATION

During the current financial year, the PKR has appreciated by 6.44 rupees or 2.3% against the US dollar. Similarly, the current calendar year has seen an appreciation of 2.31 rupees or 0.83%.

Money Market Updates In the money market, the benchmark 6-month Karachi Interbank Bid and Offer rates slightly increased, indicating subtle shifts in short-term interest rate expectations.

Conclusion: PKR’s Promising Outlook The PKR’s recent appreciation against the US dollar and its steady performance against other major currencies underscore a promising outlook for Pakistan’s currency market. The central bank’s policies, alongside the government’s economic reforms and collaboration with international entities like the IMF, are pivotal in shaping the country’s financial stability and growth.

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