Rupee ticks up to new 10-week high
Pakistani currency maintained its winning streak for the fourth consecutive working day on Monday, rising to a new 10-week high above Rs281 against the US dollar in the inter-bank market.
The fresh gains came ahead of the International Monetary Fund executive board meeting on January 11 for potential approval of the release of second loan tranche of $700 million to Pakistan. According to State Bank of Pakistan’s data, the rupee appreciated 0.04%, or Rs0.12, and closed at Rs281.28 against the greenback. With this, the currency has cumulatively risen 1.55%, or Rs4.36, in the past six weeks, which will help control inflation, propelled higher by expensive imports of goods into the country.
Exchange Companies Association of Pakistan reported that the rupee depreciated 0.04%, Rs0.09, in the open market and stood at Rs282.34/$.
The difference between currency exchange values in the inter-bank and retail markets widened slightly, but the spread remained satisfactory at 0.37% (or Rs1.06), which was well below the IMF-recommended maximum gap of 1.25% (around Rs4 at current values). Meanwhile, the rupee continued to find support against the US dollar in the inter-bank market following a surge in supply of the foreign currency in the banking network.
Read Rupee hits 10-week high against US dollar
Pakistan’s foreign exchange reserves, held by the SBP, soared 19%, or $1.3 billion, in the past two weeks in the wake of inflows from multilateral creditors. The reserves stood at a five-and-a-half-month high at $8.22 billion in the week ended December 29, 2023, according to the central bank’s latest update released on Thursday last week.
Apart from the IMF tranche, more inflows are expected from the multilateral and bilateral creditors including the AIIB, World Bank and ADB.
The current account balance is also likely to remain at breakeven level, fueled by a surge in exports and contraction in imports in December 2023.
Published in The Express Tribune, January 9th, 2024.
Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.