Rupee makes second highest weekly recovery

Gains 11.20 against dollar in a week in inter-bank market

KARACHI:

Pakistani currency made the second-highest recovery of Rs11.20 in the week ended on Friday as it gained 0.52% (or Rs1.18) on a day-to-day basis, touching a new three-week high at Rs228.45 against the US dollar in inter-bank market.

“It (Rs11.20) is the second-highest weekly recovery (in the country’s history),” reported Arif Habib Limited Head of Research Tahir Abbas in a short commentary.

In percentage terms, the rupee regained almost 5% in the week from September 26-30, 2022, he calculated.

Friday was the sixth consecutive working day when the currency maintained its uptrend. Cumulatively, it regained 4.69% (or Rs11.26) in six days.

Meanwhile, the central bank reported that the Real Effective Exchange Rate (REER) – the value of Pakistani rupee against a basket of currencies of its trading partners – “appreciated to 94.3 in August, compared to 93.2 in July, owing to high inflation in Pakistan, compared to its trading partners”.

The rupee had closed at Rs218.75 against the greenback on August 31, 2022. A month earlier, it ended trading at Rs239.37 on July 29, 2022.

According to analysts, a REER below 100 is favourable for the national economy as it supports exports and makes imports expensive.

Earlier, the authorities took a number of administrative measures to control imports and support exports. Therefore, REER of around 94 in August supported the economy, the analyst maintained.

The appreciation of rupee-dollar exchange rate increases REER as well and vice versa.

Published in The Express Tribune, October 1^st, 2022.

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