Rupee continues winning streak, gains Rs1.06 against US dollar

Pakistani currency has strengthened below Rs290 against the US dollar for the first time in the past week in the wake of improvement in foreign currency inflows, maintaining the winning streak for the 15th consecutive working day on Tuesday.

According to State Bank of Pakistan's (SBP) data, the domestic currency has further regained 0.37% or Rs1.06, hitting a high at Rs289.80 against the greenback.

The currency stands just Rs1.31 shy away from its pre-interim government value at Rs288.49/$ in mid of the last month.

Read more: Rupee reaches six-week high, stands below 291/$

With the latest surge, Pakistani currency has cumulatively regained almost 6% or Rs17.30 in the past 15 working days to date.

To recall, the currency had lost slightly over 6% or Rs18.60 to an all-time low at Rs307.10 against the greenback in the first week of September 2023 compared to Rs288.49/$ before the Caretaker Prime Minister Anwaarul Haq Kakar took oath in mid of August 2023.

Market talks suggest the inflows of foreign currencies have improved after the government in the office and the central bank came into action against currency smugglers, speculators and hoarders. SBP has continued to suspend the licences of the exchange companies that were allegedly involved in illicit trade activities.

Also read: Rupee reaches 5-week high

The crackdown has helped attract inflows through official channels. Exports are selling their holdings on futures counters on the outlook the currency may recover to Rs260-280/$ under the ongoing upward cycle. Similarly, the inflows of workers' remittances through official channels have also improved in recent days.

Arif Habib Limited said the other day the currency may improve to Rs278-280/$ under the ongoing smart rally. Earlier, the interim commerce minister Gohar Ejaz said the actual value of the currency stands at Rs260/$ at present.

In the open market, the local currency regained 0.68%, or Rs2, to Rs291/$, according to the Exchange Companies Association of Pakistan (ECAP).

In the retail market, it has cumulatively recovered almost 13% or Rs37 in the past month to date.

The difference in the value of the rupee between inter-bank and open markets narrowed down to 0.41% (Rs1.20) which is well below the IMF recommended maximum spread of 1.25% (almost Rs4).