In winning run, rupee stands below 285/$
PHOTO: FILE
Pakistani currency is displaying strong signs of maintaining its powerful rally as on Wednesday it smoothly surpassed the much talked about resistance level of Rs285 against the US dollar to a new three-month high in the inter-bank market.
According to central bank’s data, the rupee notched up fresh gains of 0.37%, or Rs1.04, and reached Rs284.68 against the greenback in a winning streak that continued for the 20th consecutive working day.
The currency strengthened further on the back of a number of measures undertaken by the caretaker government to control foreign currency leakages under the Afghan transit trade (ATT) mechanism.
The interim administration on Tuesday banned the import of smuggling-prone goods by Afghanistan through its territory and made the import regime stringent, moving decisively to stop the damage inflicted to its economy and external sector due to the misuse of ATT.
The rupee has cumulatively regained 7.84%, or Rs22.32, in the past 20 days as the supply of foreign currencies remained higher compared to their demand in the country following a crackdown on the illicit currency traders and smugglers.
The stern action against illegal activities encouraged exporters to sell their dollar proceeds in advance on futures counters in a bid to ward off potential losses owing to the consistent uptrend of the rupee.
Similarly, overseas Pakistanis are sending more remittances back home through official channels like banks and authorised exchange companies, resulting in an increase in foreign currency flows compared to the demand.
Earlier, the rupee hit its record low at Rs307.10/$ on September 5, 2023 due to lax control of authorities over currency smuggling and the Hawala-Hundi network.
In the open market too, the currency gained 0.35%, or Rs1, to close at Rs285/$ on Wednesday, according to the Exchange Companies Association of Pakistan.
Accordingly, the difference between exchange rates in the two markets dropped to within the ceiling of 1.25% recommended by the International Monetary Fund (IMF). About a month ago, the gap had widened to over 10%.
Officials in the caretaker government noted that inflows of foreign currencies through export earnings and workers’ remittances stood higher compared to their demand for import payments.
However, the loss of foreign currency through under or over-invoicing under ATT was disrupting the supply-demand balance in local markets. Now, the government has sprung into action to plug leakages.
Published in The Express Tribune, October 5th, 2023.
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