PSX Closing Bell: The Right Things

August 3, 2022 (MLN): The Pakistani rupee (PKR) witnessed a massive appreciation in a single session on Wednesday, managing to rally 9.8 rupees or a 4.19% increase in DoD against the US dollar, thanks to improved market sentiment as a result of improved economic fundamentals.

Accordingly, in today’s interbank session, the local unit settled the trade at PKR 228.8 compared to yesterday’s close of 238.38 per USD.

The rupee endured a highly volatile trading session with prices trading in a range of 13.25 rupees with an intraday high bid of 238.25 and an intraday low bid of 227. In the open market, the domestic unit was trading at 220/222 per cent. U.S. DOLLAR.

Speaking to Mettis Global, Fahad Rauf, head of research at Ismail Iqbal Securities, said the strong valuation reflects an improvement in liquidity in the interbank market as a result of higher export earnings.

The notable drop in imports that narrowed the trade deficit has played a vital role in improving market sentiment. Meanwhile, the positive signal from the IMF has also played a catalytic role in PKR’s strong valuation, Ahsan Mehanti, director of Arif Habib Group, told Mettis Global.

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Wajid Rizvi, head of research at Intermarket Securities, also believed the IMF’s recent statement played an important role in easing local unit pressure.

If the PKR continues this upward rally going forward, it could rise by 8% in the coming days.

Federal Finance and Revenue Minister Miftah Ismail said on Monday: “The government’s efforts to reduce imports are finally starting to show results and the government is eager to work on mitigating the economic crisis.”

On the same day, in an interview with Bloomberg, while hinting at imminent stability, Pakistan sees a way out of the current economic crisis without going into default thanks to progress on a stalled International Monetary Fund (IMF) loan. ) as well as cuts.

Meanwhile, Dr Esther Perez Ruiz, IMF’s Resident Representative for Pakistan on the IMF front said on Wednesday: “Pakistan has completed all previous credit assessment actions.”

She went on to say that the country has complied with its last previous IMF action for the combined 7th and 8th revisions after raising the petroleum development tax (PDL).

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So technically, this development should free up the $1.177 billion tranche, bringing total payouts under the program to about $4.2 billion, which would further improve the dollar’s PKR parity.

In FYTD, the PKR lost 23.95 rupees, or 10.47%, while plummeting 52.28 rupees, or 22.85% against the USD in CYTD, according to data collected by Mettis Global.

Over the past 52 weeks, PKR has lost 31.53% against the greenback, reaching its low of 239.94 on July 28, 2022 and high of 163.22 on August 5, 2021.

In addition, since the peak of August 20, 2021, the local unit has weakened by 17.76% and 19.79% against EUR and GBP respectively.

Together with the USD, the currency gained 11.9 rupees or 4.28% against the British pound as the day’s closing price was PKR 278.78 per GBP, while the previous session ended at PKR 290.72 per GBP. Similarly, the value of PKR rose 10.9 rupees or 4.69% against EUR, which closed today at PKR 233.08 at the interbank.

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In addition, PKR is also valued at 6.01%, 5.03%, 4.25%, 4.19% and 4.10% against JPY, CHF, SAR, AED and CNY, respectively.

On the other hand, within the money market, the overnight repo rate was 14.25/14.50% by the end of the session, while the 1-week rate was 14.75/14.85%.

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