KARACHI: Pakistani currency has recovered over one rupee to 150.91 against the US dollar in the inter-bank market in the past two days after Saudi Arabia activated a mechanism for the supply of petroleum oil on deferred payments to Islamabad.
“The rupee recovered following the easing of pressure on import payments after Saudi Arabia agreed to activate a credit line of $3.2 billion from July to provide petroleum oil to Islamabad on deferred payments over the next three years,” Forex Association of Pakistan (FAP) President Malik Bostan said in comments to The Express Tribune on Friday.
Pakistan remains a net oil importing country and oil remains its largest import commodity. Oil import constitutes around one-fourth of the total import bill because Islamabad meets nearly 70-80% of energy needs through imports.
Earlier, the central bank let the rupee depreciate 7.5% to an all-time low of 151.95 against the greenback under a fresh round of depreciation from May 16 to 20. The State Bank of Pakistan spokesman, while commenting on the rupee depreciation, said recently “this movement reflects demand and supply conditions in the foreign exchange market.” “It (the drop in rupee value) will help correct market imbalances,” he said.
Bostan said the currency stability encouraged individuals to convert foreign currencies into rupees. Earlier, they withheld the foreign currencies in anticipation of further rupee depreciation.
“Some 95% of the individuals who visited exchange company counters were sellers today (Friday), while the rest were buyers,” he said, adding that the supply of dollars surged significantly and forced currency dealers to release $5 million in the inter-bank market during the day.
The supply of dollars and other foreign currencies from the individuals is expected to remain high on Saturday and Monday as well which was why the “currency dealers booked to sell another $5-7 million in the inter-bank market on Monday,” he said. In the open market, the rupee recovered around Rs3 to 151 to the greenback in the past two days. “The rupee may recover another Rs4-5 in the open market early next week if the supply of dollars from individuals remains high,” he said.
In line with the recovery of the rupee, the price of gold dropped Rs900 per tola (11.66 grams) to Rs70,400 in the past two days, an office-bearer of the All Sindh Saraf and Jewellers Association said.
The drop in gold came despite an increase of $6 per ounce (31.10 grams) to $1,282 in the international market, the association reported.
Pakistan remains a relatively small market for gold but it largely depends on imports as it does not produce the precious metal locally.