Rupee surges on remittance boost

Sixth day of gains fuelled by positive IMF outlook, increased inflows

KARACHI:

In line with market expectations, the increase in inflows of workers’ remittances supported the rupee, hitting over a 10-week high at above Rs281 against the US dollar in the interbank market, maintaining a winning streak for the sixth successive working day on Wednesday.

According to the State Bank of Pakistan’s (SBP) data, the domestic currency appreciated by 0.03%, or Rs0.09, to close at Rs281.13 against the greenback. It has cumulatively increased by 1.60% or Rs4.51 in the past six weeks to date, as the supply of foreign currency surpassed the demand in the market.

The Exchange Companies Association of Pakistan (ECAP) reported that the currency improved by 0.56%, or Rs0.16, to close at Rs282.18/$ in the open market on a day-to-day basis. The central bank reported on Wednesday morning that the inflows of workers’ remittances have boosted by 13% to $2.38 billion in December 2023 compared to the same month last year. This supported the rupee to maintain the uptrend.

Read Rupee rises to two and a half month high at Rs281.26/$

Moreover, the optimism that the IMF executive board will approve the release of the next tranche of $700 million on Thursday (today) also supported the rupee.

The expected inflows, along with the receipts of $1.3 billion from multilateral creditors over the past two weeks, maintained the supply of foreign currency higher than its demand.

The development also prompted exporters to advance selling US dollars on the futures counter, as dealers believe the currency would soon hit Rs280/$ on the upside. Market talks suggest that the downturn in the international petroleum crude oil price was another significant reason for the gradual rally in the currency. Pakistan heavily relies on imported energies to meet local demand.

Published in The Express Tribune, January 11^th, 2024.

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