Rupee recovers to two-month high

The Pakistani currency surprisingly recovered Rs1.20 to a two-month high at Rs166.23 to the US dollar in the inter-bank market on Monday as supply of the foreign currency increased with exporters selling dollars on futures counters.

“Exporters have reportedly sold a significant amount of dollars,” Pakistan Kuwait Investment Company (PKIC) Head of Research and Development Samiullah Tariq said while talking to The Express Tribune.

Exporters sold the foreign currency at the futures counters ahead of receipt of export payments in the forthcoming days and weeks. Market talk suggests the exporters sold around $150 million in the inter-bank market during the day.

The rupee has cumulatively regained Rs2.14 against the greenback in the past three consecutive working days, according to the State Bank of Pakistan (SBP).

Pakistan’s economy has gradually returned to the growth path following the impact of Covid-19 pandemic. Textile manufacturers, the largest export earner for the country, have reported the receipt of new orders, which will bring foreign exchange.

“The rupee may continue to move in the range of Rs165-170 to the greenback till December 2020,” Tariq said.

Earlier, Pakistan’s foreign currency reserves rose $32.4 million to a five-month high at $12.64 billion in the week ended August 21, according to central bank’s the latest update.

Prior to that, the government reported a current account surplus of $424 million for July 2020. Workers’ remittances hit a record high of $2.77 billion in a month and exports rose almost 20% to $1.89 billion in July compared to $1.58 billion in June.

All these developments supported the rupee’s recovery against the dollar. The sale of dollars by the exporters on futures counters indicated the increase in supply of foreign currency in the inter-bank market.

Besides, Foreign Minister Shah Mehmood Qureshi dismissed the impression that diplomatic relations between Islamabad and Riyadh had hit a rough patch, adding that the latter had neither asked the former to return the loan of $2 billion nor did it suspend supply of petroleum products on deferred payments to Pakistan.

Tariq said the supply of foreign currency remained high in the market with no major import payment pressure. Besides, “the rupee partially regained ground due to weakening of the US dollar against other major world currencies (euro and pound) in the international market,” he said.

All the three major global credit rating agencies have set a stable outlook on Pakistan’s external financial sector. Pakistan’s economy was also growing compared to contraction in neighbouring India’s economy, he said.

Published in The Express Tribune, September 1^st, 2020.

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