July 25, 2022 (MLN): During Monday’s interbank session, the Pakistani rupee (PKR) fell 1.5 rupees against the US dollar during a free fall as the currency settled against PKR 229.88 per USD compared to the previous close of PKR 228.37 per USD.
The rupee observed a volatile trading session with prices quoted in a range of four rupees per USD with an intraday high bid of 232 and an intraday low bid of 229.75, while in the open market PKR was trading at 229/231 per USD .
Speaking to Mettis Global, Zafar Paracha, chairman of the Exchange Companies Association of Pakistan (ECAP), said the government’s lack of will to deal with this free fall of PKR will make the situation worse.
“The country’s financial qualifications aren’t that bad to drop the PKR to 232 per US dollar. It appears that the government is deliberately keeping the dollar’s bullish momentum in the interbank market intact,” he added.
The news report that SBP asked commercial lenders to manage import payment requests from their own influx also wreaked havoc in today’s session, he noted.
“Given the macroeconomic situation, the short-term PKR should not exceed 190 per USD, while in the long-term I foresee PKR at 160 per USD. However, the government’s lack of will to solve such a serious problem has prevented PKR from regaining its value,” he said.
While commenting on the ongoing political chaos, he stated that the impact of political noise on PKR’s free fall is rather meager. The biggest shortcoming is the lack of effective policies to stop this free fall. He suggested the government fix the dollar’s PKR parity to avoid further damage to the currency.
He also pointed out that the whole scenario only benefits the speculative elements and the commercial banks that make their fortune.
In CYTD, the local unit plunged Rs53.36 or 23.21% against the USD while registering a 10.89% decline against the dollar in MTD, according to data collected by Mettis Global.
Over the past 52 weeks, PKR has lost 29.86% against the greenback, reaching its low of 229.87 on July 25, 2022 and high of 161.22 on July 26, 2021.
In addition, since its high on July 26, 2021, the local unit has weakened by 19.15% and 19.67% against EUR and GBP respectively.
Local unit performance remained bleak against other major currencies in MTD as the currency lost value by 10.89%, 10.76%, 10.75%, 10.15%, 10.11%, 10 .06% and 8.96% against AED, JPY, SAR, CHF, CNY, GBP and EUR, respectively.
Meanwhile, the currency lost 3 rupees against the British pound as the day’s closing price was PKR 276.29 per GBP, while the previous session ended at PKR 273.28 per GBP.
Similarly, the value of PKR weakened 2.9 rupees against EUR, which closed today at PKR 234.84 at the interbank.
On the other hand, within the money market, the overnight repo rate was 15.25/15.50% by the end of the session, while the 1-week rate was 14.25/14.35%.
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