Rupee hits six-month high, stands below 160
A REUTERS FILE IMAGE
The Pakistani currency hit a six month high level of Rs159.96 against the US dollar in the inter-bank market on Tuesday as the greenback continued to lose value against other currencies around the globe.
The domestic currency, which has been on a rise for the past two months, had closed at Rs160.10 on Monday, according to the State Bank of Pakistan (SBP).
“The emerging market currencies are strengthening (including the Pakistani rupee) as the US dollar is weakening ahead of the stimulus package for the US economy,” Topline Securities Director Research Syed Atif Zafar said while talking to The Express Tribune.
With a fresh recovery of Rs0.14 on Tuesday, the rupee has so far regained Rs8.47, or 5%, in the past two months from its all-time low value of Rs168.43 recorded on August 26, 2020. The domestic currency was last seen closing below Rs160 on May 8.
“The situation is quite fluid due to rapidly changing scenario of Covid-19. It is hard to predict rupee’s outlook…it seems unlikely the rupee would lose value against the greenback in the short-run,” Zafar said. “The situation may continue to evolve in the short-run with regards to rupee-dollar parity.”
Other experts said the local currency has continued to strengthen on positive sentiment. Pakistan announced its intention to raise debt worth around $2 billion by floating Eurobond and Sukuk in February 2021.
Besides, the state-owned Water and Power Development Authority (Wapda) is also estimated to launch an international bond worth around $500 million over the next couple of months for its forthcoming hydropower and water projects. The scheduled inflows would help improve country’s foreign currency reserves in the medium-run.
The reserves have been fluctuating around $12 billion for the past several weeks mainly due to repayment of short-term foreign debt.
Experts said drop in international oil price much below the mark of $40 per barrel in the wake of second wave of the pandemic and extension of G20 debt repayment deadline by an additional six months may continue to keep rupee strong going forward.
G20 countries had given relaxation to debt-heavy counties, including Pakistan, to pay the loans back by December 2020. Recently, they extended the relaxation till June 2021.
Published in The Express Tribune, November 4th, 2020.
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