Rupee narrows gap with dollar as value recovers

Reduces gap to Rs13, settling at Rs300 vs greenback

KARACHI:

In a surprising turn of events, the Pakistani rupee made significant gains against the US dollar, narrowing the gap to Rs13 on Wednesday.

The currency showcased a positive trend in the open market for the second consecutive working day, reclaiming 1% of its value, equivalent to Rs3, and settling at Rs300 against the greenback, reported the Exchange Companies Association of Pakistan (ECAP).

However, the interbank market painted a different picture, as the rupee experienced its fourth consecutive day of depreciation, falling by 0.11% or Rs0.32, to reach a two-week low of Rs286.88/$, according to data from the central bank.

Until last week, the rupee-dollar exchange rate gap had widened to a record Rs27, largely due to the significant depreciation of the rupee in the open market.

The interbank remained largely stable at around Rs285-286/$ for the past several weeks – except for a few sessions. This disparity raised concerns, prompting the IMF to question the government’s control over the currency market. To address the issue, the central bank redirected a substantial portion of open market business to the interbank market.

Published in The Express Tribune, June 8^th, 2023.

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