Saudi loan rollover props up rupee
The research head was of the view that the critically low foreign exchange reserves would not allow improvement in the rupee-dollar exchange rate. photo: file
Pakistani currency on Thursday edged up to a one-week high at slightly above Rs285 against the US dollar in the inter-bank market on the back of some improvement in foreign currency inflows in the country.
A day ago, Saudi Arabia rolled over its $3 billion in deposits at the State Bank of Pakistan (SBP) for another year by the end of December 2024.
Pakistan was liable to repay the funds to the kingdom next month but the rollover is expected to ensure the much-needed stability in the country’s foreign exchange reserves. Owing to that, Pakistani rupee got vital support versus the greenback.
According to SBP’s data, the domestic currency inched up 0.08%, or Rs0.22, and closed at Rs285.17 against the dollar.
Market talk revealed that the currency had briefly recovered to Rs284.72/$ at a point in time, but closed comparatively lower around Rs285/$.
The rupee has hovered around that level for almost two weeks now. Thursday was the third consecutive working day for the uptick in the currency.
Market players observed some political instability associated with the upcoming general elections scheduled for February 2024.
Read: Saudi Arabia extends term of $3b deposit for another year
In the open market, the rupee regained 0.17%, or Rs0.50, and settled at Rs286.50 against the greenback, according to the Exchange Companies Association of Pakistan.
The currency also remained stable as foreign corporate investors returned to the Pakistan Stock Exchange (PSX), who made cumulative net buying of $15 million in the past four successive sessions, an investment that was witnessed after quite a long time.
In the entire month of November, they injected a net $31 million into the PSX, lending critical support to Pakistan’s foreign exchange reserves and stabilising the rupee.
A slight drop in cut-off yields of government’s T-bills ranging from five to seven basis points in addition to the earlier decline also indirectly boosted the confidence of importers in the currency.
Published in The Express Tribune, December 1st, 2023.
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