Interbank closing: rupee gains 6.64 paisa

WEB DESK: The Pakistani rupee (PKR) witnessed a surge of 6.64 paisa against the US dollar (USD) during Wednesday’s interbank session, closing at PKR 279.5 per USD.

This positive shift followed a period of political unrest that had gripped the nation since the elections on February 8.

During the intraday session, the PKR reached a high bid of 279.8 and a low ask of 279.6. In the open market, exchange companies quoted the dollar at 279.7 for buying and 282.5 for selling, reflecting the currency’s recovery.

Yesterday’s weakness in the PKR against the USD was attributed to the political turmoil; however, the scenario took a positive turn as major political parties reached a consensus to form a coalition government. This newfound clarity in the political landscape contributed to the rebound of the Pakistani rupee.

Despite this positive development, concerns arise from recent data released by the central bank regarding the country’s macroeconomic indicators.

Pakistan’s current account balance slipped into the red zone due to declining exports and an increase in imports. Additionally, foreign direct investment (FDI) recorded a negative value of $173.2 million in January, mainly due to divestment by Chinese investors.

The financial markets are currently experiencing uncertainty, primarily driven by delays in election outcomes.

Fitch Ratings has expressed concerns that this near-term political uncertainty could complicate the country’s efforts to secure a financing agreement with the International Monetary Fund (IMF), succeeding the Stand-By Arrangement (SBA) expiring in March 2024.

In comparison to major currencies, the PKR showed mixed results. While it lost 82.28 paisa against the Euro, closing at 302.07, it experienced gains against the British Pound, Swiss Franc, and Chinese Yuan.

The British Pound became costlier by 74.09 paisa, closing at 352.69, while the Swiss Franc and Chinese Yuan gained 66.07 paisa and 4.27 paisa, closing at 317.11 and 38.88, respectively.

The Saudi Riyal closed at 74.52, registering a loss of 1.97 paisa, and the UAE. Dirham decreased by 2.01 paisa, settling at 76.12.

Looking at the broader picture, during the current financial year, the PKR has appreciated against the dollar by 6.49 rupees, or 2.32 per cent, and in the current calendar year, it has appreciated by 2.36 rupees, or 0.84 per cent.

In the money market, the benchmark 6-month Karachi Interbank bid and offer rates increased by 7 bps to 21.42 per cent and 21.67 per cent, respectively, indicating a shift in the financial landscape.

In the coming weeks, it is expected to provide more clarity on the economic trajectory as the nation grapples with both political and economic challenges.

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