Rupee edges up on steady foreign currency inflows

Rupee touches new seven-week high below Rs283 against the US dollar

KARACHI:

Pakistani currency maintained its gradual winning streak for the eighth consecutive working day on Thursday, when it touched a new seven-week high below Rs283 against the US dollar in the inter-bank market on steady supply of foreign currency in the banking system.

According to State Bank of Pakistan’s (SBP) data, the rupee ticked up 0.04%, or Rs0.11, and closed at Rs282.79 against the greenback. With the fresh appreciation, the currency has cumulatively gained 1%, or Rs2.85, in the past four weeks.

Exchange Companies Association of Pakistan (ECAP) reported that the currency edged up 0.08%, or Rs0.25, on a day-on-day basis in the open market to close at Rs284.25/$. The improvement came after the Asian Development Bank (ADB) agreed to extend financing of $1.2 billion and the World Bank approved new funding of $350 million for Pakistan.

Read Winning streak takes rupee to 7-week high

Currency dealers voiced hope that the rupee would end around Rs280/$ in the outgoing calendar year 2023 because of the anticipated stable demand for foreign currency for import payments. Analysts, however, did not rule out the possibility of a slight uptick in import demand in the last few days of the year, which would lead to some depreciation of the rupee.

Market talk signals that a breakeven current account balance on a month-on-month basis, slight improvement in international payments and increase in foreign exchange reserves, held by the State Bank, would keep supporting the rupee. Pakistan is expected to receive fresh debt inflows of $1.5-2 billion from the multilateral and bilateral creditors once the IMF approves the release of the second loan tranche of $700 million on January 11, 2024.

Published in The Express Tribune, December 22^nd, 2023.

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