USD/PKR Advances as FATF Decides Whether to Remove Pakistan from Grey List

USD/PKR is increasing on Wednesday, after closing in the red on Monday and Tuesday.

Currently, the pair is trading at 154.250, up 0.23%. The Pakistani government is controlling the rate of its national currency, which is why the rupee is not as volatile as floating currencies.

PKR supported by exports, FATF decision in spotlight

Pakistan’s currency is looking more confident after the government announced that textile exports rose almost 4% to about $8.1 billion in the seven months to January.

In the first half of the financial year 2020, the exporters’ USD sales helped the rupee strengthen against the American currency.

Economists expected the rupee to continue its appreciation amid hopes that Pakistan would be removed from the Financial Action Task Force’s grey list. The FATF’s plenary session is taking place this week. The event has gathered 800 representatives from 205 countries and international organizations like the United Nations, the International Monetary Fund, and World Bank.

Unfortunately for Pakistan, a FATF subgroup decided that the country should continue to remain in the grey list of FATF. Allies Turkey and Malaysia supported Pakistan at the meeting, but that was not enough. The FATF’s International Co-operation Review Group (ICRG) decided at the Paris plenary that Pakistan should not be removed from the grey list, citing Pakistan’s failure to monitor terror funding. Nevertheless, the final decision will come this Friday. FATF said in a statement:

“Six days of meetings will focus on global action to follow the money that fuels crime and terrorism and reduce the harm caused to people and society.”

A person familiar with the matter told media that Islamabad was confident that it would get out of the grey list sooner than later. Pakistan is expected to demonstrate complete compliance on 16 out of 27 required parameters and partial compliance on nine other points.

“Pakistan will show it is making progress at the (Paris FATF) meet. Getting out of the grey list will not happen this time. However, it will happen this year either in June or in September,” the person said, adding that Pakistan is supported by China, Turkey, and Malaysia.

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