Continuing its winning streak, Pakistani rupee recovered another 0.66%, or almost Rs2, on Friday and reached an 11-day high at Rs302.95 against the US dollar in the inter-bank market as sentiment turned positive and foreign currency supplies improved in the system.
It was the third consecutive day of gains for the rupee, during which it recovered 1.37%, or Rs4.15, according to the SBP’s data.
Similarly, in the open market, the currency regained almost 1%, or Rs3, to Rs304 against the greenback, according to the Exchange Companies Association of Pakistan.
The currency has seen a cumulative appreciation of almost 8%, or Rs24, in the past four working days in the retail market.
Read Rupee’s recovery closes rate gap
With the sharp rise in rupee’s value, the difference between exchange rates in retail and inter-bank narrowed to a mere 0.35%, or Rs1.05, meeting a loan condition of the International Monetary Fund (IMF), which had recommended keeping the gap below 1.25%.
The difference had spiked to 7%, or Rs30, four days ago, putting a question mark over the ongoing $3 billion IMF loan programme.
The smart rally in the currency market may help control imports-fueled inflation in the country, triggering hopes of revival of economic activities in the near future.
Market talk suggests that the crackdown on foreign currency smugglers and black marketers in areas bordering Afghanistan resulted in an increase in the supply of foreign currency, which propped up the rupee.
The upturn strongly signals that the fresh round of rupee depreciation has come to an end, which will force exporters to sell their withheld dollars in the inter-bank market to avoid losses.
Also, following the crackdown on Hawala-Hundi operators, foreign currency flow will accelerate as overseas Pakistanis are expected to send home more remittances through the official banking channels.
The rupee value was not negatively impacted by the fall in central bank’s foreign exchange reserves. According to latest data, the reserves dropped $70 million to $7.78 billion in the week ended September 1, 2023. The downtick in reserves persisted for the seventh straight week.
Gold hits 8-week low
Taking cue from the strengthening rupee, the gold pricing committee revised down the commodity’s price by Rs4,000 to an eight-week low at Rs212,500 per tola (11.66 grams) on Friday.
Published in The Express Tribune, September 9th, 2023.
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