Minister discusses CDA reservations in privatization JCC

July 28, 2022 (MLN): The Pakistani rupee (PKR) lost 3.9 rupees against the greenback during today’s interbank session as the currency settled the trade at PKR 239.94 compared to yesterday’s closing rate of 236 .02 per USD.

The rupee observed a volatile trading session with prices quoted in a range of 3.5 rupees per USD with an intraday high bid of 240 and an intraday low bid of 237.75, while the open market PKR traded at 242/244 per USD.

As a result of gloomy macros, ie deteriorating current account balances, melting foreign exchange reserves and chaos among importers, the Pakistani rupee (PKR) reached the mark of 240 per US dollar in intraday trading.

The current account deficit (CAD) was $17.4 billion in FY22, an increase of a whopping 6.2x YoY compared to a $2.8 billion deficit in FY21, mainly due to higher import bills and a subdued growth in employee remittances.

The economic chaos has created uncertainty among traders, especially importers, regarding the payment of import bills. In addition, the banks are trading higher than the interbank rates for opening LCs.

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Recently, Pakistan Chemicals & Dyed Merchant Association (PCDMA) filed a complaint about banks charging higher exchange rates than interbank rates.

In a letter to Acting Governor SBP, Dr. Murtaza Syed, the association said they are facing great hardship today as the commercial banks fail to track interbank interest rates amid the constant decline of the local currency against the US dollar in withdrawing their documents.

Regarding PKR’s continued depreciation, Zafar Paracha, chairman of the Exchange Companies Association of Pakistan (ECAP), believes the government is deliberately keeping the dollar’s bullish momentum intact in the interbank market, as it is one of the conditions from the IMF.

In this regard, the latest Business Recorder report surfaced which said: “Treasury Secretary Miftah Ismail said on Wednesday that the government interventions in the foreign exchange (forex) market cannot be made to control the dollar exchange rate in light of the commitment with the IMF.”

However, all other regulatory enforcement actions with the banks and exchange offices were assured, he added.

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In CYTD, the local unit plunged by Rs 63.49 or 26.44% against the USD while registering a 14.63% decline against the dollar in MTD, according to data collected by Mettis Global.

Over the past 52 weeks, PKR has lost 32.53% against the greenback, reaching its low of 239.94 on July 28, 2022 and high of 161.88 on July 29, 2021.

In addition, since its high on August 20, 2021, the local unit has weakened by 21.70% and 23.53% respectively against EUR and GBP, respectively.

In addition, the local unit’s performance in one month remained dismal against other major currencies as the currency exchanged 13.90%, 13.78%, 13.72%, 13.34%, 13.14%, 13.05 % and 10.52% lost against JPY, AED, SAR, CHF, GBP, CNY and EUR, respectively.

Meanwhile, the currency lost 8.2 rupees against the British pound as the day’s closing rate was PKR 292.41 per GBP, while the previous session ended at PKR 284.19 per GBP.

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Similarly, the value of PKR weakened by 5.5 rupees against EUR, which closed today with the interbank at PKR 244.79.

On the other hand, within the money market, the overnight repo rate was 15.00/15.10% by the end of the session, while the 1-week rate was 14.95/15.05%.

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This post Minister discusses CDA reservations in privatization JCC

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