Pakistan’s currency has apparently entered a stabilisation phase as it inched up 0.07% (or Rs0.15) to Rs218.60 against the US dollar in inter-bank market on Thursday, after the country reported that its inflation reading hit a five-decade high at 27% in August.
The high inflation may mount pressure on the rupee against foreign currencies.
However, the government’s consideration to seek an emergency loan from the International Monetary Fund (IMF) to address flood miseries helped the rupee to end the day on a positive note.The currency managed to maintain its uptrend for the third consecutive working day. It extended the recovery to Rs217 against the greenback in the early hours of trading.
The currency, however, failed to sustain the intra-day gains, which were clipped towards the close of session.
With the latest improvement, the local currency has cumulatively regained 1.49% (or Rs3.32) in the past three days, compared to Monday’s close at Rs221.92.
Experts had projected the rupee to stabilise in the range of Rs215-220 before further gaining ground to around Rs205-210 over the next one to two months.
They said the rupee would see a short rally around the time the IMF revived its loan programme and released loan tranche between the last week of August and first week of September 2022.
The receipt of IMF tranche will stabilise Pakistan’s foreign exchange reserves.
Emerging demand for import of food items (especially onion and tomato) to overcome shortfall, caused by flood damages, has created renewed appetite for dollar in the inter-bank market. The situation forced the traders to acquire foreign currency at the available rate.
Published in The Express Tribune, September 2nd, 2022.
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