Rupee touches 22-month high
With a fresh gain of Rs0.55 on Monday, rupee has recovered 8.54% or Rs14.39 during the past seven months to date. PHOTO: FILE
Pakistani rupee touched 22-month high at Rs154.04 against the US dollar in the inter-bank market on Monday, as exporters continued to sell the foreign currency in panic ahead of an expected spike in workers’ remittance inflows around the holy month of Ramazan starting mid-April.
On the other hand, importers avoided buying the foreign currency on futures counter as they expect a gain in value of rupee against the dollar in the days and weeks to come. The situation where the currency supplies remain high compared to its demand kept strengthening rupee.
Going forward, the local currency may maintain uptrend. “It may test around Rs152 on the upside (against the dollar) in the weeks to come in and around Ramazan,” Pak-Kuwait Investment Company Head of Research Samiullah Tariq said while talking to The Express Tribune.
The rupee had breached through Rs154 during the day and hit intra-day trade high of Rs153.93 on Monday, he added.
“Later on, rupee may lose to around Rs160 by December 2021…as pick up in imports, increase in international petroleum oil prices and revival of international travelling is expected,” he said.
Tariq noted that exporters were selling dollars in advance on futures counter ahead of Ramazan when receipt of workers’ remittances mostly peak every year in Pakistan.
To recall, remittances have remained strong above $2 billion a month since the last nine months. They grew by 24% during the first eight months (July-February) of the current fiscal year 2020-21 to $18.74 billion compared to $15.10 billion in the same period of last year.
The first 10-day pattern of remittances inflow in the ongoing month of March stood notably strong. “This suggests remittances will surpass $2.40 billion in March,” a leading bank’s head of remittances department said the other day.
The likely situation forced the importers to stay on the sidelines of the markets, as they adopted a wait-and-see strategy.
The State Bank of Pakistan (SBP) may report the data of workers’ remittances for the month of March 2021 in between April 10-15.
With a fresh gain of Rs0.55 on Monday, the rupee has recovered 8.54% or Rs14.39 during the past seven months to date since it touched an all-time low of Rs168.43 on August 26, 2020.
Besides, Tariq added, outflow of foreign currency on account of international travelling have remained very low amid partial suspension of air travelling due to Covid-19 pandemic.
People in Pakistan spend a huge amount on religious tours like Hajj and Umrah which was very limited. “The low foreign expenditures on travelling also supported the rupee to grow stronger compared to the US dollar,” he said.
The low foreign expenditures of the country compared to its income during the Covid-19 pandemic have helped in maintaining its foreign currency reserves to a three-year high above $13 billion for the past couple of months. They grew $275 million to $13.29 billion in the week ended March 19, 2021.
The additional inflows from overseas Pakistanis through the central bank initiative of Roshan Digital Account (RDA) have also supported the rupee to maintain its uptrend for the past several months. The country has so far received over $700 million during the first six months since RDA kicked off operations in September 2020.
“The rupee has maintained uptrend since reports about Pakistan resuming its $6 billion loan programme with the International Monetary Fund’s (IMF) started making rounds,” Exchange Companies Association of Pakistan (ECAP) Chairman Malik Bostan said the other day.
Soon, IMF would release the third tranche worth $500 million to Pakistan. Besides, the World Bank and Asian Development Bank (ADB) have approved projects worth $10-12 billion each over the next five years.
Moreover, Pakistan has also kick-started the process of raising $2 billion from world market through the launch of Eurobonds. “The inflows would keep rupee strong,” he said.
Gold loses shine
Gold lost Rs1,000 to Rs105,700 per tola on Monday, in line with the global trend.
The precious yellow metal dropped $6 per ounce (31.10 grams) to $1,727 at world markets, according to All Sindh Saraf and Jewellers Association (ASSJA).
“The future outlook suggests gold may continue to lose value amid increase in drive for vaccination in the developed world, especially in the US,” AA Gold Commodities Director Adnan Agar said.
“It would move between a range of $1,650-1,750 in the short run (over the next one-month). It may see $1,600 per ounce on the downside over the next three-month,” Agar said. He said the world may recover from the Covid-19 disease till June-July 2021 with the vaccination drive gearing up in the West. This would keep the gold losing, the analyst said.
Published in The Express Tribune, March 30th, 2021.
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