May 09, 2022 (MLN): Gloomy macros along with political noise made the most uncomfortable ground for local unity in April 2022 as the Pakistani rupee (PKR) fell 2.2 rupees or 1.19% against the greenback in the market interbank while following a sawtooth trend against a depreciation of 0.45%. in April 2021.

However, in the previous month, the miserable currency lost its value by 6 rupees per US dollar or 3.27% from the notable appreciation of March 2021, during which the local unit secured its position as 3.50%.

During 10MFY22, the local unit lost Rs28.14 against the USD, plunging 15.16%. Similarly, the rupee fell by Rs9.17 or 4.94% in the first four months of calendar year 2022, according to data compiled by Mettis Global.

On the other hand, the performance of PKR remained satisfactory against major currencies in April 2022, as it strengthened by 5.61%, 4.59%, 4.17%, 3.24% and 2 .95% against the JPY, EUR, CHF, GBP and CNY respectively while, the national currency fell by 1.29% and 1.19% against the SAR and AED, respectively, during the same period.

After suffering a sharp period of depreciation due to the vote of no confidence and the ousting of former Prime Minister Imran Khan, national unity rebounded in the first two weeks of April due to clarity on the political front after the decision of the Supreme Court (SC) to restore the National Assembly.

Meanwhile, the SBP’s bold decision to raise the policy rate by 250 basis points to 12.25% to counter external shocks and inflationary pressures also eased some pressures from PKR.

In addition to this, SBP imposed a 100% cash margin requirement on certain items to control imported inflation and support the balance of payments.

However, the winning streak could not last long and the rupiah took a hit on the dark macros. Growing trade deficit on skyrocketing import bill, raging oil prices in the international market and depleted foreign exchange reserves have created enough pressure on PKR.

There was a time when experts were of the opinion of declaring an economic emergency in the country as it was captured by economic and political upheaval.

As the newly formed government took charge of a cash-strapped economy where it managed to hold constructive talks with the International Monetary Fund (IMF), the PKR once again made a comeback, earn more than one rupee against USD in an intraday trade on April 25 in the interbank market.

“We had very productive meetings with Pakistan’s Finance Minister, Miftah Ismail, on Pakistan’s economic and policy developments under the Expanded Financing Facility (EFF) program. We have agreed that swift action is needed to cancel unfunded grants that have slowed discussions for the 7th review,” IMF Pakistan Mission Chief Nathan Porter said in an IMF statement.

Now, the new session of talks between Pakistan and the International Monetary Fund (IMF) will probably be held on May 18, 2022 in Doha.

According to money market experts, following the depletion of foreign exchange reserves, the economy will find a breather after the approval of the loan.

Going forward, based on the assumption that Pakistan successfully completes the seventh IMF review and the tranche is then released, followed by potential inflows from bilateral agreements, the import bill starts to decline and as the export growth momentum continues, PKR is expected to recover in the near term, settling at around 182 to the USD 1 by June 2022, then with an annual depreciation assumption of 4%, reaching 186 for 1 USD by December 2022, said Sana Tawfik, analyst at Arif Habib Limited.

All told, a resurgence in coronavirus infections and uncertainty about the impact of the geopolitical and economic situation could see PKR’s forecast change in FY23 and beyond, she added. .

Copyright Mettis Link News

Published on: 2022-05-09T16:15:26+05:00