Rupee Turns the Tide Against the US Dollar After Senate Approves SBP Bill

The Pakistani Rupee (PKR) is persevering with its good run against the US Dollar (USD) and posted gains in the interbank market today. It gained 20 paisas against the greenback after hitting an intra-day low of Rs. 177.0 against the USD during today’s open market session.

It appreciated by 0.12 percent against the USD and closed at Rs. 176.77 today after holding its own and closing at 176.98 in the interbank market on Thursday, 27 January.

The rupee closed in the green against the dollar for the second consecutive day after the Upper House of the Parliament officially passed the State Bank of Pakistan Amendment Bill despite the racket incited by the opposing senators.

The passage of the bill from the Senate was imperative for the International Monetary Fund to consider Pakistan’s Sixth Review and the delivery of a $1 billion tranche under its Extended Fund Facility. The global lender’s executive board will discuss the said program on 2 February.

In terms of the other factors impacting the local exchange rate, the country’s total liquid foreign exchange reserves went down to $22.48 billion on 21 January 2021. The SBP’s reserves fell by $846 million to $16.19 billion during the week under review as compared to $17.03 billion on 14 January. According to the central bank, the decrease in the reserve position is due to external debt and various payments.

Discussing the rupee’s near-term outlook earlier in the day, the former Treasury Head of Chase Manhattan Bank, Asad Rizvi, noted on Twitter that the central bank’s reserves have plummeted to $16.19 billion because of debt repayments that were set to begin in the new year.

He said that the challenge is enormous as the increased oil prices are putting a strain on the economy, and remittances and exports are insufficient to close the deficit. “Fiscal measures are not enough,” he added.

The PKR maintained its winning run against the other major currencies and reported gains in the interbank currency market today. It gained Rs. 1.34 against the Euro (EUR), Rs. 1.29 against the Australian Dollar (AUD), 96 paisas against the Pound Sterling (GBP), and 86 paisas against the Canadian Dollar (CAD).

Moreover, it gained five paisas against both the Saudi Riyal (SAR) and the UAE Dirham (AED) in today’s interbank currency market.