Tag: EXCHANGE RATE

  • Exchange companies remove cap on dollar-rupee exchange rate to abolish grey market

    Exchange companies remove cap on dollar-rupee exchange rate to abolish grey market

    The exchange companies have decided to stop artificially keeping Pakistani rupee (PKR) overvalued against US dollar in the open market and let the rupee-dollar exchange rate depreciate to its actual value.

    Pakistani rupee may steadily lose value until it reaches the level of the grey market in a few days, according to reports.

    The black market price of local currency is currently between Rs250 and Rs260 per US dollar, although traders had artificially kept the rate at Rs238 till Tuesday.

    “The association has decided to remove cap on rupee-dollar exchange rate,” Exchange Companies Association of Pakistan (ECAP) President Malik Bostan said in audio and video messages after chairing a zoom meeting on Tuesday.

    “The move would help eliminate black currency markets, increase flow of foreign currencies to the dealers and available to public (for international travelling, education and hospital fees and etc.”

    He said that in the interest of the country, traders voluntarily opted to restrict the exchange rate. But the choice led to an underground market for cash that seemed to be more detrimental to the country.

    “People were buying dollars from open market (at Rs238) and selling in black market (at Rs250-260), making it a business to mint profit,” he said, adding no one was coming to the dealers’ counters to sell foreign currency which resulted into drying up supplies on the other hand.

    According to ECAP General Secretary Zafar Paracha, the decision to abolish the exchange rate ceiling will aid in the eradication of the black market and restore the inflow of foreign money from the illicit system into the legitimate one.

    Additionally, the government has been urged by the International Monetary Fund (IMF) to relinquish control over the rupee-dollar exchange rate in the interbank market and allow market forces to decide the rate while taking the demand and supply of US dollars into account.

    Accordingly, it is anticipated that the local currency would also reach Rs250-260 in the interbank market as compared to the US dollar.

    Pakistan technically has three currency markets, including the interbank, open, and black markets. As a result, each of the three markets is providing a different rate.

    The black currency market was formed after Finance Minister Ishaq Dar tried to keep the currency artificially overvalued at Rs180–200 to the US dollar after returning to the ministry in late September 2022.

    The currency, therefore, appreciated to Rs218 in the early days of October from its all-time low of Rs240 the first time in late July 2022 and the last time in September 2022.

    Dar opened an investigation against the commercial banks, blaming them for market forces that had artificially devalued the currency to Rs240 per dollar.

    Governor State Bank of Pakistan (SBP) Jameel Ahmed said that the central bank has completed the investigation against 13 commercial banks allegedly involved in rupee-dollar parity manipulation.

    “The central bank is all set to take action against them in days (instead weeks and months). The action could be fiscal or regulatory one,” he added.

  • Exchange companies suggest higher US dollar rate to increase remittances

    Exchange companies suggest higher US dollar rate to increase remittances

    The government has been advised by the Exchange Companies Association of Pakistan (ECAP) to “set” the dollar rate to lessen currency market volatility as the country fights a severe economic crisis and declining foreign exchange reserves.

    The general secretary of ECAP Zafar Paracha said in a statement on Monday, “It is advised to fix the rupee/dollar exchange rate for export-import bills and remittances”. He further said these remittance proceeds could be received by banks and money changers at a fixed rate of Rs240 per dollar.

    Pakistani rupee closed at Rs228.34 per US dollar, compared with the previous close of Rs228.15 in the interbank market. In the open market, the local unit was trading at Rs238.75 against the greenback.

    Paracha suggested the government to set the rate of Rs240 per dollar for overseas Pakistanis and for inward remittance.

    He expects that by making the change, the official channel would be strengthened, remittances would increase, Hundi/Hawala would decline, and eventually, the grey market would vanish.

    According to Paracha, the exchange rate between the dollar and the local currency has hit Rs267 to Rs270. The offer could be made at Rs228 against/ the dollar in order to obtain exporters’ revenues. Additionally, the rate for importers would be determined by the weighted average of the exporter and home remittance rates. He said that it would help remittances and exporters.

    It will boost the nation’s foreign exchange reserve, encourage exporters to bring dollars, and strengthen the exchange companies’ remittances division.

    The country received $14.1 billion in remittances during the first six months (July-December) of the current fiscal year, a decline of 11.1 per cent from a year earlier.

    As of January 6, Pakistan’s foreign exchange reserves at the State Bank of Pakistan fell by $1.2 billion to $4.3 billion, just enough to fund three weeks’ worth of imports.

    Due to significant repayments of foreign debt and a lack of external funding, which have severely reduced Pakistan’s foreign reserves and resulted in ongoing dollar shortages, the country is currently facing a balance of payments crisis.

  • Pakistani rupee reverses losses against greenback

    Pakistani rupee reverses losses against greenback

    After strengthening against the US dollar on Monday, the Pakistani rupee started the new week positively.

    Discussions between Finance Minister Ishaq Dar and State Bank of Pakistan (SBP) employees and currency traders had positive effects as the local currency increased by Rs1.59, or 0.72 per cent, versus the dollar.

    In the interbank market, the rupee was able to settle at Rs220.89, according to the SBP.

    The rupee last week dropped 0.93 per cent versus the dollar, trading at Rs222.47. Analysts predicted that this week will see range-bound trading in the local currency.

    Earlier, Ishaq Dar issued a warning last week saying that anyone detected manipulating the currency rate will face harsh punishment.

    Dar said that the rupee’s true worth in relation to the dollar is less than Rs200. He predicted that the rupee will soon strengthen against the dollar and gave a warning to those who were speculating in and hoarding foreign cash.

    Furthermore, the price of Brent oil fell by 0.65 per cent to $95.15 per barrel on Monday, while the price of US West Texas Intermediate (WTI) fell by 0.83 per cent to $87.17 per barrel. With advances of 7.7 per cent and 9.3 per cent so far in October, respectively, Brent and WTI are on course to post their first monthly gains since May.

    Europe, which is anticipated to experience a recession this winter, poses a threat to global oil consumption. The European Central Bank’s policymakers are also continuing with their plans to raise interest rates, despite the fact that doing so might plunge the region into recession and stoke political unrest.

  • Pakistani rupee continues to fall against USD for the third consecutive session

    Pakistani rupee continues to fall against USD for the third consecutive session

    For the third session in a row, the Pakistani rupee lost 97 paise in the interbank market on Friday as it fell against the dollar.

    The local currency depreciated by 0.44 per cent from yesterday’s finish of Rs221.5 to settle at Rs222.47 per dollar, according to the State Bank of Pakistan.

    Data gathered by Mettis Global show that the value of the PKR has decreased by Rs16.64 or 7.52 per cent since the beginning of this fiscal year.

    This week’s first day saw the sovereign default risk rise to its highest level since November 2009. On October 25, the country’s five-year credit default swap (CDS), which functions as a form of insurance against the risk of sovereign default, climbed by more than three per centage points, reaching 52.8pc, a 13-year high.

    Investors’ decreasing confidence in Pakistan’s capacity to repay its international loans is reflected in the growing CDS level.

  • PKR suffers losses against USD for 5th consecutive day

    PKR suffers losses against USD for 5th consecutive day

    The State Bank of Pakistan and the government were unable to stabilise the exchange rate as the Pakistani rupee lost value for the fifth straight day on Monday after falling 46 paisas against the US dollar in the interbank market.

    State Bank of Pakistan reports that the local unit decreased by 0.37 per cent to close at Rs219.71.

    The closing price in the interbank market, according to the Exchange Companies Association of Pakistan (ECAP), was Rs220 as opposed to Rs219.50 in the previous trading session.

    US dollar dropped 30 paise in the open market, closing at Rs225.70 as opposed to Rs226 the previous session. Its price on October 11 was Rs219

    The optimistic market sentiments that appeared following the nomination of Ishaq Dar as finance minister in anticipation of his potential to secure dollar inflows appeared to have disappeared.

    In FY23, Pakistan would need around $32 billion to pay for its foreign debt, mostly to service it, as well as to close its current account deficit. In a recent interview with a foreign news outlet, the finance minister stated that he will seek to reschedule approximately $27 billion in non-Paris Club debt, the majority of which is owed to China.

  • Rupee resumes downward trend against US dollar

    Rupee resumes downward trend against US dollar

    Pakistani rupee suffered a marginal loss of Rs0.50 against the US dollar in the interbank market, extending its losses for a second straight session.

    State Bank of Pakistan (SBP) reports that the local currency lost Rs0.50 against the dollar in the interbank market and ended the day at Rs218.38.

    The Forex Association of Pakistan (FAP) said that banks were trading US dollars for Rs218.78 at the time. The exchange rate for the dollar in the open market was between Rs220 and Rs222.

    This is the second time, the rupee has registered a loss in its value after Federal Finance Minister Ishaq Dar’s return to office. The local currency appreciated by almost Rs22, or 10.1 per cent, against the greenback in the last 13 sessions.

    Earlier, Federal Minister For Finance and Revenue Ishaq Dar vowed to bring back Pakistani rupee at its original value which is less than 200 against US dollar. “I can genuinely prove that dollar’s actual value is below Rs200,” he added.

  • Pakistani rupee finally snaps 13-day winning streak versus US dollar

    Pakistani rupee finally snaps 13-day winning streak versus US dollar

    The Pakistani rupee (PKR) on Wednesday finally stopped rising against the US dollar after 13 sessions as it dropped by 0.04 per cent in the inter-bank market.

    It dropped nine paisas in today’s interbank market to settle at Rs217.88, depreciating by 0.04 per cent against the USD. During today’s open market session, the local currency was quoted at a day low of Rs217.65 against the US dollar.

    The recent increase in the value of the rupee is linked to a change in sentiment and the central bank’s operations against participants in currency speculation.

    On Wednesday, as traders prepared for US inflation data and its implications for future Federal Reserve rate hikes, the dollar reached new 24-year highs internationally.

    After the International Monetary Fund (IMF) predicted that Pakistan’s inflation rate will be 19.9 per cent in 2023 as opposed to 12.1 per cent in 2022, the rupee halted its 13-day winning run.

    The lender predicted Pakistan’s GDP growth rate would be 3.5 per cent in 2023 compared to 6 per cent in 2022, however this does not take the current floods into account.

    Wednesday also saw a global decline in oil prices for the third day in a straight as investors feared the impact of increasing COVID-19 regulations in China and mounting global economic threats on fuel demand.

  • Pakistani rupee crashes against US dollar for 11th day in a row

    Pakistani rupee crashes against US dollar for 11th day in a row

    For the eleventh session in a row, Pakistan’s rupee has lost value versus the US dollar, falling 0.41 per cent on Friday in the interbank market as the dollar gained momentum throughout the world and investors’ concerns about the increasing trade imbalance intensified.

    The rupee dropped by Rs0.96, according to the State Bank of Pakistan (SBP), and ended the day at Rs236.84. The rupee has lost Rs18.24, or 7.7 per cent, overall over the last 11 trading sessions against the US dollar.

    In the interbank market on Thursday, the Pakistani rupee declined against the US dollar for the tenth straight session as investors expected funding from allies and foreign creditors. It ended the day down 0.66 per cent at Rs235.88.

    The local currency increased in value last month as a result of Pakistan fulfilling all previous IMF requirements, which allowed the programme to resume. This development enabled Pakistan to receive $1.17 billion under the Extended Fund Facility (EFF).

    The local currency has recently, however, been under intense pressure once more and is currently hovering close to its all-time low as funding anticipated from allies has not yet materialised.

    Additionally, the State Bank of Pakistan’s (SBP) foreign exchange reserves decreased by $176 million, reaching $8.62 billion as of September 9, 2022, according to information made public on Thursday.

    According to the SBP, the nation possessed $14.32 billion in liquid foreign reserves. Commercial banks held $5.7 billion in net foreign reserves.

    Globally, the dollar remained close to recent highs on Friday as Treasury yields rose and the demand for the currency persisted on expectations that the Federal Reserve would need to raise rates further to control inflation.

    The US dollar index, which compares the value of the dollar to a basket of other currencies, increased to Rs109.69, which is not far from its two-decade high of Rs110.79.

    In the meantime, oil prices—a crucial factor in determining currency parity—were largely stable on Friday, but they were headed for a weekly decrease due to worries about sudden interest rate hikes that would likely slow global economic growth and fuel demand.

  • PSX surpasses 43,000-mark as IMF tranche inches closer

    PSX surpasses 43,000-mark as IMF tranche inches closer

    As trading began on Monday, the Pakistan Stock Exchange (PSX) resumed its upward trend, rising more than 700 points to cross the 43,000-mark.

    The benchmark KSE-100 index gained 764.25 points, or 1.78 per cent, from its previous finish of 42,857.57.

    PSX – August 15, 2022

    The benchmark KSE-100 index increased by 731.54 points, or 1.71 per cent, by 2:13 pm to reach 43,589.11 points, according to the PSX website.

    Additionally strengthening by Rs1.51, the Pakistani rupee (PKR) ended the day at Rs213.98. Since last week, the local currency has been steadily rising against the US dollar.

    Rupee latest closing -August 15, 2022

    The IMF’s letter of intent and Saudi Arabia’s pledge of more support were among the good developments over the weekend that contributed to the index’s strong start.

    The rupee’s robust rebound and the IMF tranche anticipated at the end of this month can be credited for the upward trend.

  • Pakistani rupee gains Rs2.13 to close at Rs221.91

    Pakistani rupee gains Rs2.13 to close at Rs221.91

    In line with improved market sentiment, the Pakistani rupee (PKR) kept strengthening versus the US dollar, closing at Rs221.91 on Wednesday in the inter-bank market.

    According to the State Bank of Pakistan (SBP), the local currency appreciated by 0.96 per cent or Rs2.13 against the dollar to settle at Rs221.91.

    The uptick on Wednesday marked the seventh straight rebound for the currency, which last month touched an all-time low of Rs239.94 against the US dollar. Since then, it has increased by almost 8 per cent.

    Pakistani rupee significantly increased last week, rising 6.8 per cent to settle at Rs224.04 in the interbank market.

    The rupee maintained its strength throughout the week as Pakistan reported a smaller trade deficit and a significantly lower import bill in July, relieving pressure on the currency that had previously been battered by the dollar.

    The International Monetary Fund (IMF) also stated that the board meeting is tentatively scheduled for late August once adequate financing assurances are confirmed.

    An official source in Abu Dhabi later emphasised in a public statement the UAE’s plan to invest $1 billion in Pakistani businesses across a range of economic and investment sectors, bringing Pakistan one step closer to closing what the IMF refers to as a financial gap.

    Market analysts anticipate significant growth in the upcoming days, assuming Pakistan manages to arrange its finance requirements.