The Pakistani rupee showed resilience on the thirteenth consecutive working day of its losing streak, indicating a potential stabilisation near the current level, slightly below Rs287 against the US dollar in the interbank market on Wednesday.
Data from the State Bank of Pakistan (SBP) revealed that the domestic currency declined by 0.18%, or Rs0.51, closing at 286.90 against the US dollar.
Over the past thirteen days, the rupee has experienced a cumulative 3.50% decline, or Rs10.07, erasing some of the gains it achieved during the prior six weeks when it reached a three-month high at Rs276.83/$ in mid-October 2023.
Market experts had predicted that the rupee would stabilise around its fair value of Rs285/$.
In the open market, the currency remained unchanged at Rs287.50/$ for the second consecutive working day, according to the Exchange Companies Association of Pakistan (ECAP).
Read Rupee falls to five-week low
The rupee’s decline was attributed to high foreign currency demand from importers, while exporters reduced their selling of the US dollar in the interbank market.
Despite these challenges, the rupee managed to avoid a more substantial drop on the back of ongoing negotiations between Pakistan and Chinese commercial banks to secure new financing worth around $600 million. This financing, expected next month, will supplement the International Monetary Fund (IMF)’s second tranche of $710 million following successful talks between the government and the IMF.
These two inflows are anticipated to increase the supply of foreign currency in the market, partially addressing concerns about rising demand.
Additionally, the recent drop in international oil prices to a two-and-a-half-month low indicates a reduced demand for the US dollar for energy imports in the domestic economy. Furthermore, the government has revised its estimate for the current account deficit for the fiscal year 2023-24, submitting a lower projection to the IMF.
Published in The Express Tribune, November 9th, 2023.
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