Rupee Sharply Recovers Against US Dollar, British Pound, Euro to End the Week

The Pakistani rupee (PKR) reversed yesterday’s substantial losses against the US Dollar during intraday trade today.

The Pakistani rupee was bullish during the early hours of intraday trade today with the interbank rate gaining Rs. 4 to reach 281 by 10 AM. By 11:25 AM, it had gained over Rs. 7 to top 278.

At close, the rupee appreciated by 2.38 percent and suspended movement at 278.46 after gaining Rs. 6.62 against the greenback.

The rupee reported big gains today after the State Bank of Pakistan (SBP) on Thursday raised the policy rate by 300 basis points to 20 percent. The central bank noted that scheduled debt repayments and a decline in financial inflows amid rising global interest rates and domestic uncertainties, continue to exert pressure on FX reserves and the exchange rate.

It is noteworthy that foreign currency reserves held by the SBP were recorded at $3.814 billion, up $556 million (17 percent) compared to 3.258 billion on February 17.

The rupee is down almost Rs. 46 since its record-breaking single-day drop of Rs. 25 in the last week of January and has since then gradually parried small losses despite economic pressure. As per exchange rate movements witnessed today, the PKR has gained over Rs. 6.6 today, recovering from yesterday’s plunge to a fresh all-time low of 285.09 against the USD.

Money changers say the SBP rate hike helped downplay the resurgent default gossip and reflected in today’s gains.

Pertinently, both local and domestic markets are bracing for a possible default by Pakistan, which is struggling to meet billions of dollars in debt repayments by June. But Finance Minister Ishaq Dar has ruled out the possibility of any default and reiterated his stance that all indicators were moving in the right direction. The weeks ahead, coupled with an uncertain bailout negotiation with the International Monetary Fund (IMF), may help clarify where the country is headed next fiscal year.

The PKR was all green against all of the other major currencies in the interbank market today. It gained Rs. 1.76 against the Saudi Riyal (SAR), Rs. 1.80 against the UAE Dirham (AED), Rs. 3.66 against the Australian Dollar (AUD), Rs. 3.90 against the Canadian Dollar (CAD), and Rs. 7.72 against the Euro (EUR).

Moreover, it gained Rs. 7.54 against the Pound Sterling (GBP) in today’s interbank currency market.

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