After 29 days of straight losses, the Pakistani rupee (PKR) made a comeback and increased against the dollar today.
After the IMF mission arrived in Pakistan to start technical discussions on the nation’s 9th review this week, it increased as high as 264 versus the US dollar. In relation to the US dollar, the rupee increased by 0.64 percent to settle at 267.89, a gain of Rs. 1.74. It hit an intraday low of 270 despite today’s advances before turning growth patterns.
After three days of straight intraday losses where the PKR lost Rs. 7 or more against the US Dollar as markets sought clarity before the lender’s delegation arrived yesterday, today’s encouraging gains are a welcome change (Monday).
The local currency, which opened trading at 266.875 in the dollar-denominated in the open market.
By lunchtime, the dollar had risen to a high of 264 versus the rupee. Following 1 PM, the local currency’s advances halted and it remained at 265 against the top foreign currency until the interbank close.
Talks with the IMF are crucial as Pakistan seeks immediate relief.
After talks between Pakistan and the IMF resumed today, the rupee posted gains vs the US dollar. Dar and Co. have told the lender that they intend to comply with all requests in order to maintain programme compliance and programme completion. The Pakistani side has made it clear that while lasting institutional improvements will be implemented right away, all painful decisions will be made gradually.
Markets were also upbeat as money changers noticed a large number of exporters lining up at counters to exchange their US dollar profits, which helped the PKR recover after nearly a month of losses.
After a terrible few weeks of continuous loss, which forced the authorities to reluctantly relinquish control of exchange rate movement, today’s advances come as a welcome relief. The rupee decreased by Rs. 38.74, or 14.37 percent, over the preceding three interbank trading sessions (Thursday through Monday). Following the abrupt decline, the rupee experienced a 16 percent decline, making it the region’s worst-performing currency this year.
The PKR could yet lose more ground to the USD, but Fitch Solutions says that this decline will help the nation get more IMF loans. However, the rupee’s prolonged decline would have wider economic repercussions as well. It would intensify imported inflationary pressure in the near future, which might eventually lead to the SBP raising policy rates at a faster rate. These elements would only make Pakistan’s already difficult economic situation worse.
In the interbank market today, the PKR was up against every other significant currency. It increased versus the Saudi Riyal (SAR), the UAE Dirham (AED), the Euro (EUR), the Canadian Dollar (CAD), and the Australian Dollar (AUD) by 44 paisa’s, 47 paisa’s, Rs. 2.18, Rs. 2.45, and Rs. 2.64, respectively (AUD).
Further, it gained Rs. 2.97 against the Pound Sterling (GBP) in today’s interbank currency market.