285.9: Rupee Gains Sharply Vs. US Dollar After SBP Interest Rate Hike
The Pakistani rupee gained good ground against the US Dollar during intraday trade today after opening trade at 286.5 in the interbank market.
The Pakistani rupee was largely stable today with the interbank rate initially going as high as 285.99 before dropping back to the 286 level. Open market rates across multiple currency counters (undocumented) still remained above 300 to as high as 304 while a few channels managed 309.
A few documented channels managed as high as 293 against the greenback.
At today’s close, the PKR appreciated by 0.25 percent and suspended movement at 285.99 after gaining 71 paisas today.
Today’s gains come after the State Bank of Pakistan surprised the market on Monday by hiking the interest by 100 basis points to 22 percent.
“With the current stance on bailout revival, it is fair to assume the SBP rate hike was done in an emergency response to one of the IMF’s conditions. The exchange rate wasn’t impacted because of it but sentiments improved with hopes of cash disbursal before June ends,” a trader commented.
In the statement after its meeting held on June 12, the MPC viewed the then monetary policy stance as appropriate to achieve the objective of price stability “barring any unexpected domestic and external shocks.” The MPC further noted that this outlook was “contingent on effectively addressing the prevailing domestic uncertainty and external vulnerabilities”.
The central bank said that the committee has noted two important domestic developments since the last meeting that have slightly deteriorated the inflation outlook and which could potentially increase pressure on the already stressed external account.
On the IMF front, things have progressed fast in the past few days, with the quick passage of Finance Bill 2023-24 over the weekend, and Prime Minister Shehbaz Sharif’s telephonic conversation with the lender’s Managing Director Kristalina Georgieva today, expressing hope that the lender will announce its decision on the current loan program in one or two days.
The IMF MD acknowledged the efforts of the government and hoped for further improvements in Pakistan’s economy.
Overall, the rupee is down nearly Rs. 60 since January 2023. Since April 2022, it is down over Rs. 108 against the greenback. As per the exchange rate movements witnessed today, the PKR has gained 71 paisas against the dollar today.
The PKR was bullish against some of the other major currencies in the interbank market today. It gained 19 paisas against the Saudi Riyal (SAR), 19 paisas against the UAE Dirham (AED), and Rs. 1.04 against the Pound Sterling (GBP).
Conversely, it lost 12 paisas against the Canadian Dollar (CAD), 39 paisas against the Australian Dollar (AUD), and 70 paisas against the Euro (EUR) in today’s interbank currency market.
Source: Pro Pakistani