Rupee Holds Out Against the US Dollar Following IMF News

Industry

The Pakistani Rupee (PKR) held out against the US Dollar (USD) in the interbank market today. It appreciated by one paisa against the greenback after hitting an intra-day low of Rs. 176.75 against the latter during today’s open market session.

It appreciated by 0.01 percent against the USD and closed at Rs. 176.74 today after gaining 23 paisas and closing at 176.75 in the interbank market on Tuesday, 4 January.

The rupee held its own against the USD based on the news that the federal Cabinet had agreed to make the details of sovereign guarantees public to meet another condition of the International Monetary Fund (IMF).

Moreover, foreign exchange inflows through the Roshan Digital Accounts (RDAs) were recorded at a total of $3.16 billion by the end of December, according to data released by the State Bank of Pakistan (SBP). The country registered inflows of $244 million in December as compared to $239 million in November, which depicts a month-on-month increase of 2.1 percent.

A few dozen fiscal improvements are making headway against inflationary pressures and are putting a good amount of weight behind the exchange unit but a few matters need attention.

The currency rate is one of the most difficult topics to discuss and predict in Pakistan nowadays. The country shoulders a wide canvas of balance-of-payment issues that have never been properly addressed, which is why the IMF has been called on so many times. Additionally, the trade deficit has been growing steadily for decades as a result of reduced exports and rising imports to reach an all-time high only now. Even $31 billion in annual remittances is insufficient to close the deficit and support the local unit.

Discussing the rupee’s near-term outlook in a news column, the former Treasury Head of Chase Manhattan Bank, Asad Rizvi, explained how the IMF involvements have influenced the exchange ledger. He wrote: “…it is worth noting that rupee gained substantially during the IMF suspension period, hitting 152.25 in May 2021. [However, ever] since the beginning of the new fiscal year, PKR started losing its gloss, the balance of payment pressure mounted as the trade gap began widening due to record imports while export growth was not enough to fill the gap”.

The PKR also posted losses against the other major currencies in the interbank currency market today. It posted losses of 94 paisas against the Pound Sterling (GBP), 24 paisas against the Canadian Dollar (CAD), 47 paisas against the Australian Dollar (AUD), and nine paisas against the Euro (EUR).

Conversely, the rupee held out against both the Saudi Riyal (SAR) and the UAE Dirham (AED) in today’s interbank currency market.

Source: Pro Pakistani