Rupee continues to gain little ground

tained its uptrend for the second consecutive working day on Monday as it gained 0.20% (Rs0.43) to close at Rs220.41 to a dollar in the inter-bank market. The rupee has regained a total value of Rs0.50 in the past two working days. The currency got extended support in the backdrop of much-anticipated Financial Action Task Force’s (FATF) decision that removed Pakistan from grey list and placed it in white list.

The development stands positive for the currency as the country’s reclassification increases trust of the world, including foreign investors, in Pakistan. The decision may lead to improvement in foreign currency inflows. Besides, a report that Saudi Arabia had agreed to invest $12 billion in different projects in Pakistan including setting up a new oil refinery also provided vital support to the rupee. Prime Minister Shehbaz Sharif, along with a delegation, has embarked on a visit to the kingdom.

Later, high Saudi officials are expected to arrive next month to formally announce the huge investment of $12 billion. The rupee has also gained support on reports that Pakistan would seek rollover of Chinese loans of $6.3 billion as PM Shehbaz is scheduled to visit the second largest economy in November. In recent days, two global rating agencies downgraded Pakistan’s credit rating after foreign exchange reserves fell by around $9 billion in the past 10 months to $7.6 billion.

Existing reserves are barely sufficient for 1.1 month of imports and foreign debt repayment, according to Fitch Ratings.