The Pakistani rupee (PKR) was stable against the dollar during interbank trade on Monday, going as high as 259.625 against the greenback.
At close, the rupee appreciated by 0.03 percent and suspended movement at 259.92 after gaining 7 paisas against the greenback.
The local unit was initially bearish against the dollar and opened trade at 259.70 in the open market. By midday, the greenback went higher against the rupee to around 260.25. After 1 PM, the local unit was largely stable against the top foreign currency before the interbank close.
The rupee gained further against the dollar today as money markets anticipate the State Bank of Pakistan (SBP) to hike its policy rate up to 20 percent before its scheduled monetary policy review on March 16th. The central bank may be forced to call an urgent revision before the next secondary market auction on 8 March for raising Rs. 1.8 trillion and to appease the International Monetary Fund (IMF) for a billion-dollar bailout.
Pertinently, the 6-Month Karachi Inter-Bank Offered Rate (KIBOR), a benchmark for lending to consumers and businesses, increased by 25 basis points (bps) to touch an all-time high of 19.96 percent amid rising borrowing costs. Meanwhile, the other widely used 3-Month KIBOR was up 25 bps and was recorded at 19.81 percent. The 1-year KIBOR rose by 50 bps to 20.32 percent.
The rupee is still down over Rs. 24 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.
Money changers say markets are anticipating SBP to raise interest rates by at least 200 basis points in an emergency market review before its scheduled moot. The feeling is exchange rate movement will continue its fortnightly seesaw movements beyond the interest rate hike and fiscal support from makeshift macroeconomic policies in the near term may help alleviate some pressure. The political storm isn’t helping now, and it will not help much after the general elections in October this year.
The PKR was bullish against all of the other major currencies in the interbank market today. It gained one paisa against the Saudi Riyal (SAR), one paisa against the UAE Dirham (AED), 34 paisas against the Canadian Dollar (CAD), 96 paisas against the Euro (EUR), and Rs. 1.64 against the Australian Dollar (AUD).
Moreover, it gained Rs. 1.77 against the Pound Sterling (GBP) in today’s interbank currency market.
Aliraza and the