Rupee continues to rally against US dollar, gains Rs1.04

The sustained appreciation of the rupee is being attributed to an increased supply of greenback

ISLAMABAD:

Pakistani rupee on Tuesday witnessed its 20th consecutive recovery session as it gained Rs1.04 against the US dollar in the interbank trading and closed at Rs285.72 against the previous day’s closing of Rs 286.76.

According to the Forex Association of Pakistan (FAP), the buying and selling rates of the dollar in the open market stood at Rs283.5 and Rs286.3 respectively.

Meanwhile, the price of the Euro decreased by Rs3.34 to close at Rs299.56 against the last day’s closing of Rs302.90, according to the State Bank of Pakistan (SBP).

Interbank closing #ExchangeRate for today https://t.co/5KOy6ml3z5#SBPExchangeRate pic.twitter.com/bE3ny3hRBX

— SBP (@StateBank_Pak) October 3, 2023

Read More: Anti-smuggling drive lifts rupee further

The Japanese Yen came down by 01 paisa to close at Rs1.90, whereas a decrease of Rs4.08 was witnessed in the exchange rate of the British Pound, which was traded at Rs345.42 as compared to the last closing of Rs349.50.

The exchange rates of the Emirates Dirham and the Saudi Riyal declined by 29 and 28 paisa to close at Rs 77.78 and Rs 76.17 respectively.

The sustained appreciation of the rupee can be attributed to an increased supply of the greenback. Recent trade data further supports this, with export earnings up by 4% and import payments decreasing significantly by 13% in September compared to the month of August.

Data from Topline Research indicates that the Pakistani rupee continues to outperform most other world currencies on a daily basis, as many currencies continue to depreciate against the US dollar.

Recent reports also suggest that export earnings and official channels for workers’ remittances have improved compared to the period before the government’s crackdown on currency smuggling.

Intriguingly, there are discussions in the market that black markets are offering the US dollar at a lower price (in terms of rupee value) compared to the official markets.

While a treasury firm projected the rupee would stabilise around Rs285/$ in the current cycle of appreciation in the interbank market, the prolonged crackdown on currency smuggling may extend the rupee’s rally beyond this level. However, it’s essential to monitor this situation closely, as excessive appreciation could have implications for imports and exports.

Meanwhile, official currency markets have seemingly brushed off a slight dip in the country’s foreign exchange reserves, held by the SBP, due to foreign debt repayments last week. This downturn follows a brief uptick in the previous week, indicating a complex interplay of factors affecting the Pakistani rupee’s exchange rate.