Rupee recovers ground in open market
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In a notable development, the Pakistani currency saw a surge in its open market value, marking the first time in over a year that it surpassed the interbank rate, albeit remaining well within the International Monetary Fund (IMF) recommended range.
According to the State Bank of Pakistan (SBP), the domestic currency reached a two-week high at Rs301.16 against the US dollar in the interbank market, registering a gain of 0.59%, or Rs1.79, in a single day.
Simultaneously, the open market saw the currency rise by 1.33%, or Rs4, reaching Rs300 per dollar, as reported by the Exchange Companies Association of Pakistan (ECAP). Consequently, the disparity between the two markets turned negative, amounting to Rs0.16, compared to the previous week’s high of Rs30.
This surge marks the fourth consecutive trading day that the local currency has strengthened in the interbank market, accumulating nearly 2%, or Rs6, in gains over the past four days, compared to its recent all-time low of Rs307.10 per dollar, just four days ago.
Analysts attribute this recovery to exporters selling their withheld US dollars, increasing the supply of the greenback. Their motivation lies in avoiding exchange losses and speculating that the currency may stabilise around the Rs300 per dollar mark in the coming days.
Market talks suggest that the rupee could potentially rebound to a range of Rs250-270 per dollar, driven by anticipated substantial investments from Saudi Arabia and the United Arab Emirates (UAE) under the Special Investment Facilitation Council (SIFC) platform in Pakistan.
Furthermore, stringent measures against currency smuggling have contributed to stemming the rupee’s freefall, helping it regain some of its lost value against the US dollar. Earlier, the currency had experienced a 6% decline, equivalent to Rs18.50, within the first three weeks of the caretaker government’s tenure, reaching a record low of Rs307.10 per dollar.
In the open market, the rupee has regained 9.33%, or Rs28, against the US dollar over the past five consecutive working days, reaching the level of $300 per dollar.
Gold prices decline amid rupee’s upward trend
Taking cues from the rupee’s upward trajectory in the open market, the gold pricing body has reduced the commodity’s price by Rs2,600 to Rs209,400 per tola (11.66 grams) in Pakistan on Monday.
Published in The Express Tribune, September 12th, 2023.
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