Rupee Ends 2021 With One of Its Biggest Gains Against US Dollar Following SBP Bill

The Pakistani Rupee (PKR) has bid farewell to 2021 by posting big gains against the US Dollar (USD) in the interbank market today. It appreciated Rs. 1 against the greenback after hitting an intra-day high of Rs. 176.45 against the latter during today’s open market session.

It also appreciated by 0.57 percent against the USD and closed at Rs. 176.51 today after gaining 72 paisas and closing at 177.51 in the interbank market on Thursday, 30 December.

Today’s surge follows the highly contentious SBP Amendment Bill 2021 alongside the Supplementary Finance Bill 2021, both of which were tabled in the National Assembly on Thursday. Prior to the interbank wrap-up, experts were confident that regardless of the backlash they fetched, these bills could actually help the local unit end the year on a high.

Economic analyst A. A. H. Soomro told ProPakistani,

This was widely expected. Perhaps the timing had to collide with government tabling the bill at the last working day of the calendar year. The recent discount rate hike along with other mini budget measures, should clip the import numbers for next few months. Consequently, IMF’s board approval should pave way for further dollars to flow in. Hence, Rupee movement is expected to reflect the changing outlook on the dollar outflows.

The PKR had a volatile 2021. After starting the year at Rs. 159.83 against the USD, it has ended the year at Rs. 176.51 against the greenback, just two days after hitting rock-bottom (Rs. 178.24), causing fear and unrest to drive the local exchange rate sentiments. It also lost 10 percent value against the dollar in 2021 alone on a year-on-year calendar year (CY) basis.

The local unit notably depreciated nine times in 11 years against the USD. Since its previous upsurge during the CY 2016, it has plunged a whopping 69 percent from PKR. 104.5985 to PKR 176.5135 against the dollar.

Resultantly, the rupee-dollar parity could enter comfortable levels as the government seems ready to deploy extra measures to revamp the forex reserves in 2022.

According to the central bank’s weekly report that was released on Thursday, Pakistan’s total liquid foreign exchange reserves dropped by $359 million on 24 December to $24.2 billion. The SBP’s reserves fell by $298.4 million to $17.855 billion during the week under review as compared to $18.153 billion on 17 December.

Discussing the rupee’s near-term outlook earlier in the day, the former Treasury Head of Chase Manhattan Bank, Asad Rizvi, said, “Though Net Reserves with SBP fell by $298 million to $17.855 billion, but [the] presentation of SBP Amendment Bill in the National Assembly can support Rupee”.

Although the PKR managed to pull off an encouraging win against the dollar today, Rizvi did warn that the last day of the year could be volatile due to the squaring of positions, “and if [the] outflow is small, then PKR will further recover”.

The PKR continued its good run against the other major currencies as well and posted gains in the interbank currency market today. It posted gains of 74 paisas against the Pound Sterling (GBP) and Rs. 1.23 against the Euro (EUR).

The rupee also gained 27 paisas against both the Saudi Riyal (SAR) and the UAE Dirham (AED), and held out against the Canadian Dollar (CAD) in today’s interbank currency market.

Moreover, it appreciated against the Australian Dollar (AUD) and posted gains of 64 paisas as well.

Source: Pro Pakistani