Tag: Interbank Foreign Exchange Market

KARACHI: The US dollar plummeted by Rs3.39 against the Pakistani Rupee to Rs215.49 on Friday August 12, 2022 in interbank foreign exchange market.

The rupee appreciated to Rs215.49 to the dollar from previous day’s closing of Rs218.88 in the interbank foreign exchange market.

The local units gained about Rs24.45 or 10.19 per cent during past nine trading days.

READ MORE: Dollar continues to fall against PKR; ends at Rs218.88

Currency dealers said that the tight monitoring of the State Bank of Pakistan (SBP) had eased the pressure on exchange rate.

It is worth mentioning that the foreign exchange reserves of the country depleted massively.

Pakistan’s foreign exchange reserves have declined 43-month low at $13.56 billion by week ended August 05, 2022. The foreign exchange reserves of country fell by $648 million as those were $14.21 billion a week ago i.e. July 29, 2022.

READ MORE: Rupee jumps to Rs221.91 against dollar

Pakistan’s foreign exchange reserves were seen at $13.597 billion on January 2019. The country’s foreign exchange reserves hit all-time high of $27.228 billion on August 27, 2021. Since then the foreign exchange reserves have declined by $13.668 billion.

However, the recent recovery in rupee value may be attributed to the efforts of the central bank.

The State Bank of Pakistan (SBP) initiated inspection against the exchange companies on August 01, 2022. On August 2, 2022, the SBP suspended the operations of four branches of two ECs (Galaxy Exchange Co and Al-Hameed International Money Exchange Co) for violation of SBP regulations.

READ MORE: Pakistani rupee extends gain to dollar for sixth session

The central bank also imposed monetary penalties on some ECs in the recent past. Besides, due to violations of SBP instructions, arrangements of 13 franchises have been terminated by six different ECs in the recent past.

The dealers said that after assurance from the International Monetary Fund (IMF) that Pakistan had met all the requirement for the disbursement of $1.2 billion tranche under Extended Fund Facility (EFF).

The currency experts said that the rupee was also supported by reduction in trade deficit during the first month of the current fiscal year.

READ MORE: Dollar plunges to Rs226.15 at interbank closing on August 4, 2022

The trade deficit narrowed by 18.33 per cent to $2.62 billion for the month of July 2022 as compared with the deficit of $3.23 billion in the same month of the last year.

The trade deficit was mainly contracted due to 12.8 per cent decline in import bill during the month under review. The import bill of the country was reduced to $4.86 billion in July 2022 as compared with $5.57 billion in the same month of the last year.

KARACHI: The US dollar continued to fall against the Pakistan Rupee (PKR) on Thursday and ended at Rs218.88 in the interbank foreign exchange market.

The exchange rate witnessed an increase of Rs3.06 in the rupee value to end at Rs218.88 from previous day’s closing of Rs221.94 in the interbank foreign exchange market.

READ MORE: Rupee jumps to Rs221.91 against dollar

The local units gained about Rs21.06 or 8.78 per cent during past eight trading days.

Currency dealers said that the tight monitoring of the State Bank of Pakistan (SBP) had eased the pressure on exchange rate.

The SBP initiated inspection against the exchange companies on August 01, 2022. On August 2, 2022, the SBP suspended the operations of four branches of two ECs (Galaxy Exchange Co and Al-Hameed International Money Exchange Co) for violation of SBP regulations.

READ MORE: Pakistani rupee extends gain to dollar for sixth session

The central bank also imposed monetary penalties on some ECs in the recent past. Besides, due to violations of SBP instructions, arrangements of 13 franchises have been terminated by six different ECs in the recent past.

The dealers said that after assurance from the International Monetary Fund (IMF) that Pakistan had met all the requirement for the disbursement of $1.2 billion tranche under Extended Fund Facility (EFF).

The currency experts said that the rupee was also supported by reduction in trade deficit during the first month of the current fiscal year.

READ MORE: Dollar plunges to Rs226.15 at interbank closing on August 4, 2022

The trade deficit narrowed by 18.33 per cent to $2.62 billion for the month of July 2022 as compared with the deficit of $3.23 billion in the same month of the last year.

The trade deficit was mainly contracted due to 12.8 per cent decline in import bill during the month under review. The import bill of the country was reduced to $4.86 billion in July 2022 as compared with $5.57 billion in the same month of the last year.

The experts, however, expressed concerns over massive decline in foreign exchange reserves. They said that expected inflows from IMF would help the country’s external sector.

READ MORE: Pakistani Rupee makes historic recovery; dollar ends at Rs228.80

KARACHI: The Pakistani Rupee (PKR) extended appreciation against the US dollar on Friday for the sixth straight session since falling to historic low on July 28, 2022.

The exchange rate witnessed Rs2.11 gain in rupee value to end at Rs224.04 to the dollar from previous day’s closing of Rs226.15 in the interbank foreign exchange market.

READ MORE: Dollar plunges to Rs226.15 at interbank closing on August 4, 2022

The rupee continued the gain for sixth straight session after falling to historic low. The rupee witnessed record low at Rs239.94 on July 28, 2022. However, since then the rupee is continuously gaining to the dollar.

The local units gained about Rs15.90 or 6.62 per cent during past six trading days.

Currency dealers said that the tight monitoring of the State Bank of Pakistan (SBP) had eased the pressure on exchange rate.

READ MORE: Pakistani Rupee makes historic recovery; dollar ends at Rs228.80

The SBP initiated inspection against the exchange companies on August 01, 2022. On August 2, 2022, the SBP suspended the operations of four branches of two ECs (Galaxy Exchange Co and Al-Hameed International Money Exchange Co) for violation of SBP regulations.

The central bank also imposed monetary penalties on some ECs in the recent past. Besides, due to violations of SBP instructions, arrangements of 13 franchises have been terminated by six different ECs in the recent past.

The dealers said that after assurance from the International Monetary Fund (IMF) that Pakistan had met all the requirement for the disbursement of $1.2 billion tranche under Extended Fund Facility (EFF).

READ MORE: Rupee makes recovery against dollar for 3rd straight day

The currency experts said that the rupee was also supported by reduction in trade deficit during the first month of the current fiscal year.

The trade deficit narrowed by 18.33 per cent to $2.62 billion for the month of July 2022 as compared with the deficit of $3.23 billion in the same month of the last year.

READ MORE: Dollar falls to Rs238.84 at interbank closing on August 01, 2022

The trade deficit was mainly contracted due to 12.8 per cent decline in import bill during the month under review. The import bill of the country was reduced to $4.86 billion in July 2022 as compared with $5.57 billion in the same month of the last year.

The experts, however, expressed concerns over massive decline in foreign exchange reserves. They said that expected inflows from the International Monetary Fund (IMF) would help the country’s external sector.

KARACHI: The Pakistani Rupee made a historic single day recovery of Rs9.58 against the US dollar on Wednesday to close at Rs228.80 in the interbank foreign exchange market.

The exchange rate recorded a recovery of Rs9.58 in rupee value to end at Rs228.80 to the dollar from previous day’s closing of Rs238.38 in the interbank foreign exchange market.

READ MORE: Rupee makes recovery against dollar for 3rd straight day

The rupee made recovery for the fourth consecutive day after the Chief of the Army Staff (COAS) telephoned to the US for speeding up the release of IMF tranche.

The rupee recorded historic low of Rs239.94 against the dollar on July 28, 2022.

Analysts said that expected inflows from the IMF of $1.2 billion, there will be multilateral inflows unlocking, followed by bilateral/friendly countries, and coupled with global and local recession impacting/reducing Oil and food/commodity prices globally, there will be much lower imports (exports will also be hit), thereby lowering demand for dollar outflows. This should help improve PKR against the US$, at least for some time.

READ MORE: Dollar falls to Rs238.84 at interbank closing on August 01, 2022

Currency experts said that the fall in import bill during the month of July 2022 eased the pressure on the foreign currency demand. Further, the International Monetary Fund (IMF) likely to release the tranche by end of this month.

The free-fall in rupee continued for the past many months against the greenback due to political instability and weak economic indicators.

The experts said that the continuous decline in rupee value may also be attributed to the fall in foreign exchange reserves.

The foreign exchange reserves of the country have further declined.

READ MORE: Pakistan interbank rupee ends Rs239.37 to dollar on July 29, 2022

Pakistan’s foreign exchange reserves have declined by $368 million to $15.242 billion by week ended July 15, 2022. The foreign exchange reserves of the country were $15.61 billion a week ago i.e. July 07, 2022.

The country’s foreign exchange reserves hit all-time high of $27.228 billion on August 27, 2021. Since then the foreign exchange reserves have declined by $11.986 billion.

The official reserves of the State Bank also depleted by $388 billion to $9.329 billion by week ended July 15, 2022 as compared with $9.717 billion a week ago.

The foreign exchange reserves held by the central bank witnessed a record high at $20.146 billion by week ended August 27, 2021. Since then the official reserves of the SBP declined by $10.817 billion.

READ MORE: Rupee plunges near Rs240 to dollar at interbank closing

KARACHI: The Pakistani Rupee (PKR) crashed by about 17 per cent against the US dollar in the month of July 2022 owing to weakness in balance of payment and political instability.

The exchange rate was opened at Rs204.85 to the dollar on July 04, 2022 and ended at Rs239.37 at closing on July 29, 2022 at interbank foreign exchange market.

During the month about 17 trading days were observed due to long Eid holidays and bank holiday. The government announced holidays from July 08, 2022 to July 12, 2022 on account of Eid ul Adha. Meanwhile, the due to bank and weekly holidays, the month started on July 04, 2022.

READ MORE: Pakistan interbank rupee ends Rs239.37 to dollar on July 29, 2022

The rupee witnessed a consistent decline during the month and recorded historic low of Rs239.94 to the dollar on July 28, 2022.

Experts believed that the downgrade of rating of Pakistan by three top credit rating agencies deteriorated the outlook of the country. Furthermore, the political conflict further aggravated the situation.

Besides, the massive decline in foreign exchange reserves also put pressure on the dollar demand.

Analysts at Arif Habib Limited said that the fear of free-fall in rupee value has gripped the financial markets and different stakeholders of the economy is that if prudent and timely economic measures are not taken, Pakistan may spiral out of control, much like Sri Lanka.

READ MORE: Rupee plunges near Rs240 to dollar at interbank closing

This accelerated the free fall of Pak Rupee against dollar in the interbank recently. However, to highlight, the initial major depreciation of PKR against dollar was triggered back in April 2022, post Vote of No Confidence leading to political change in the country.

The political risks and shifting paradigms took a toll on the foreign investors/creditors’ confidence, hence contributing largely to bringing Rupee under pressure.

The analysts said that although we believe that the Pak Rupee still has inherent depreciation bias in the long-term, in the short term, we expect some stability to be restored. We attribute this short-term stability conditional upon: inflows from bilateral and multilateral creditors, IMF inflows, and strengthening of some macro-economic variables including current account position along with State Bank of Pakistan’s (SBP) attempts to curb market speculation.

READ MORE: Dollar touches new peak at Rs236.02 at interbank closing

A report released by KASB Research pointed out that exchange rate decline would continue until there is support and funds from the International Monetary Fund (IMF). “This could be another 10-15 per cent decline,” the report stated, adding that however, post clarity on IMF there would be 20-25 per cent recovery in the rupee value.

The analysts at the KASB Research are expecting a fair value of the rupee against dollar at Rs190 – 200.

The report further pointed out that the main challenge is hyperinflation caused by the exchange rate movement. The government could be forced to maintain cuts on imports which could hurt companies who rely on imported raw material. The auto sector is a good example.

READ MORE: Rupee crashes Rs232.93 to dollar at interbank closing

It however said that Pakistan would meet its sovereign liabilities, especially of the two bonds maturing in December 2022. “However, the market yields are indicating that the marking is pricing a higher risk of default.”

It further noted that the rupee had been hit hard and is down 51 per cent year to date and 17 per cent in just in the month of July 2022.