Pakistani currency on Wednesday hit a new five-week high below Rs294 to a dollar in the inter-bank market, maintaining its winning streak for the 11th consecutive working day in the backdrop of improving supply of foreign currencies in the domestic market.
According to the State Bank of Pakistan’s (SBP) data, the currency regained 0.35%, or Rs1.02, and closed at Rs293.88 against the greenback.
In the open market, however, the rupee dropped for the first time in the past 12 working days, losing 0.33% of its value, or Rs1, at Rs297/$, according to the Exchange Companies Association of Pakistan (ECAP).
Accordingly, the difference between rupee-dollar exchange rates in the two markets widened to 1.06% (or Rs3.12). It was in line with the International Monetary Fund’s (IMF) recommended gap of a maximum of 1.25% in any of the five consecutive working days.
In inter-bank trade, the rupee has cumulatively regained 4.49%, or Rs13.22, in the past 11 working days.
The recovery came on the back of increase in the supply of foreign currencies. A crackdown by law enforcement agencies on currency smugglers and hoarders has destroyed the illegal currency markets, encouraging exporters and overseas Pakistanis to send foreign currency through official channels including banks and authorised exchange companies.
Earlier, the currency lost 6%, or Rs18.60, to the all-time low of Rs307.10/$ in the first three weeks (August 15 to September 5) of the current caretaker government.
A leading currency dealer in the open market expected the rupee to recover to Rs290/$ in the next phase. “The currency may continue its smart rally until it reaches Rs250/$ in inter-bank trade, subject to increased inflow of foreign currencies,” he said.
The dealer pointed out that currency dealers surrendered $15 million a day in the inter-bank market in recent weeks compared to $5-7 million before the crackdown.
He anticipated that they would be providing $20 million to the inter-bank network soon as the flow of foreign currencies stood higher than their demand in recent days.
Published in The Express Tribune, September 21st, 2023.
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