Pakistani Rupee Makes Another Jump Against the US Dollar
Pakistani Rupee continued its upward movement against the US Dollar on the third day of the week. The Rupee gained 33 paisas against the USD today.
PKR closed below Rs. 153 to the USD on the interbank market. The rupee was closed at Rs. 152.75 to the USD in the interbank market today (31 March), appreciating 33 paisas, up from Tuesday’s (30 March) Rs. 153.09 to the USD. The Rupee is currently at a 22-month high against the USD, the level last seen in June 2019.
In March 2021, PKR has posted a gain of Rs. 5.35, or 3.4 percent, against the greenback. According to Tresmark, the fall in the value of the dollar will help to relieve debt pressure by approximately Rs. 550 billion.
Earlier today, the dollar hit a 22-month low of Rs. 151.50, last seen on June 11, 2019, before rebounding. The lowest trade reported so far today was at Rs. 151.75.
According to the dealers, the Rupee is strengthening due to improved external position and lower demand for import payments.
With today’s issue of Eurobonds fetching Pakistan $2.5 billion, PKR is expected to gain further strength in the coming weeks.
Asad Rizvi and Manhattan Bank
Asad Rizvi, former treasury head of Chase Manhattan Bank, wrote on his Twitter profile, “Keep in mind that we are heading for a choppy day. The market may take some time to stabilize. But this is quite normal behavior. In such a situation, institutions and corporate players should avoid speculation & book their transactions according to their needs.”
However, the financial sector believes that the rupee is gaining due to higher inflows of dollars and reduced demand for the currency in both the interbank and open market.
The inflows as approved by the IMF, the World Bank, and the Asian Development Bank have created a positive sentiment for the local currency. This also hints at a further appreciation for PKR in the coming weeks.
Roshan Digital Account
A.A.H Soomro, Managing Director at Khadim Ali Shah Bukhari Securities, said, “Market supply is higher as travel and imports are still curtailed. Expect more money to clock-in because of the Ramzan factor, remittances, and Roshan Digital Account (RDA). The lesser the travel – the stringent the lockdown – the lower the consumption and higher the dollar supply. Thus, the currency is appreciating. Expect money from the IMF, World Bank, and Eurobonds to further support FX reserves.”
“The potential impacts of this appreciation will be positive for offsetting imported inflation, given rising oil prices in the global markets, and for lowering the debt repayment burden on the country’s foreign debts. However, it may render exports competitive in the short run,” he added.
Soomro said, “There is another peculiar angle to the PKR. Despite, the independence of the SBP, the government would want to muster all the anti-inflationary support it can as it moved to increase electricity prices by a massive 34 percent to meet reduce Circular Debt. Currency managers seem to be extending an olive branch. No sign of major depreciation for a few months, as REER is around approximately 95 rupees as well. Nonetheless, major swings should be avoided either side.”
PKR has also been posting gains against other major currencies this week. PKR appreciated by 43 paisas against the Euro, by 45 paisas against the Pound Sterling (GBP), by 53 paisas against the Australian Dollar (AUD), and by 35 paisas against the Canadian Dollar (CAD).
The PKR has also been improving gradually against both the UAE Dirham (AED) and the Saudi Riyal (SAR) in the interbank market. PKR improved by 9 paisas against the AED and by 8.8 paisas against the SAR today.
I am a freelance writer studying Mass Communication at the University of Karachi in the faculty of Media sciences. Also certified from Hubspot Academy as a Content Marketer.
