Rupee hits over two-month high against dollar

Pakistani currency resumed its uptrend on Wednesday after taking a breather for a day, hitting over two-month high at slightly above Rs281.50 against the US dollar in the inter-bank market.

The uptick stemmed from a reduction in demand for the foreign currency and an increase in its supply in the banking network.

According to State Bank of Pakistan’s (SBP) data, the rupee gained 0.06%, or Rs0.17, to Rs281.72 against the greenback. The currency has cumulatively appreciated 1.39%, or Rs3.92, in the past five weeks.

Exchange Companies Association of Pakistan (ECAP) reported that the local currency edged up 0.03%, or Rs0.11, and closed at Rs282.42/$ in the open market.

Market talk suggests that the currency bounced back after the Pakistan Bureau of Statistics (PBS) reported that exports increased 22% year-on-year and hit an 18-month high at $2.84 billion in December 2023, while imports dropped 12% to $4.51 billion.

Read Foreign currency inflow hopes aid rupee’s uptrend

The improvement in balance of trade propped up the rupee against foreign currencies and it rebounded after a nominal drop of 0.01% a day ago.

The currency also got support from a surprise increase of $852 million in the central bank’s foreign exchange reserves, which rose to $7.76 billion, according to the weekly data update.

The currency market had not priced in the growth in forex reserves due to the year-end, which came after some multilateral and bilateral institutions provided funds to Pakistan ahead of the IMF executive board meeting on January 11 for potential approval of the next loan tranche of $700 million. Earlier, the country achieved a staff-level agreement with the IMF at the completion of first review under the ongoing $3 billion loan programme.

Published in The Express Tribune, January 4^th, 2024.

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