Rupee snaps weakening streak with 2.2% recovery

Currency closes at Rs207.23 against dollar as exporters sell $150m

KARACHI:

Pakistani currency made the single largest recovery of Rs4.70 (or 2.22%) in a day to Rs207.23 against the US dollar in the inter-bank market, eventually breaking the two-week long record-making downward streak on Thursday.

The domestic currency hit an intra-day high of Rs206.50 against the greenback, a currency dealer said.

Earlier, the domestic currency had cumulatively plummeted 5.55% (or Rs11.16) in the past nine consecutive working days to an all-time low at Rs211.93 on Wednesday, according to the central bank’s data.

After the recovery in the rupee, the depreciation in the rupee in the past year reduced to 31.54% (or Rs49.69) to date compared to June 30, 2021’s closing at Rs157.54 against the dollar.

“Rupee has made the historical high recovery following exporters returned to selling counters in the inter-bank market after quite a long time,” Exchange Companies Association of Pakistan General Secretary Zafar Paracha said while talking to The Express Tribune.

“Exporter sold a part of their holdings following IMF gave the green signal for the revival of its loan programme for Pakistan.”

Exporters sold $150 million during the day. Accordingly, the supply of foreign currency increased compared to demand in the market, he said.

Earlier, they had stopped selling dollars on speculations that the rupee would further lose ground against the greenback amid the then prolonged delay in the resumption of the IMF loan programme for Pakistan.

Pakistan is expected to receive around $1 billion in the next tranche of loans from IMF once its $6 billion programme is officially revived in a few days.

The resumption of the programme would unlock inflows of the foreign currencies from other multilateral and bilateral sources as well as improve the country’s capacity to make international payments. The development would stand positive for the rupee.

Secondly, China has signed the documents to roll over its loan worth $2.3 billion to Pakistan.

The rollover was in pending for the past four-month. Beijing is now expected to deposit the funds with the State Bank of Pakistan (SBP) in a few days.

With this, the country’s foreign exchange reserves are anticipated to improve by $2.3 billion from a 32-month low of $8.2 billion at present.

Thirdly, the petroleum oil price slipped below $110 per barrel in world markets during the day compared to over $120 per barrel a few days ago.

The drop in global oil price also stood positive for the rupee, as Pakistan heavily relies on imported energy to meet local demand. The drop in energy price would cut the country’s import bill and reduce demand for dollars.

 

Published in The Express Tribune, June 24^th, 2022.

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