Pakistani currency continued to appreciate gradually for the sixth successive day on Wednesday, rising to a new three-month high above Rs279.50 against the US dollar in the inter-bank market in the wake of improved inflows of the foreign currency compared to its demand.
According to State Bank of Pakistan’s (SBP) data, the rupee strengthened 0.04%, or Rs0.12, and closed at Rs279.67 against the greenback.
The currency has cumulatively gained 9.80%, or Rs27.43, in the past four and a half months compared to the all-time low of Rs307.10/$ hit in the first week of September 2023.
Exchange Companies Association of Pakistan (ECAP) reported that the rupee rose 0.08%, or Rs0.23, on a day-on-day basis, closing at Rs280.86/$ in the open market. A leading analyst said the local currency was drawing support from lower demand for the greenback for imports while its supply stood better through an increase in export earnings and remittances sent home by overseas Pakistanis.
The higher inflows were well reflected in the six-month high current account surplus of $397 million recorded in December 2023, the analyst said.
Read Rupee gradually rises to new 3-month high
Citing Caretaker Finance Minister Dr Shamshad Akhtar, she said Pakistan’s foreign exchange reserves hit an 18-month high at $9.1 billion after release of the International Monetary Fund’s (IMF) loan tranche of $700 million recently, which supported the rupee to maintain its uptrend.
The analyst believes the rupee will continue to appreciate in the short run until import payments surpass the sum of export proceeds and workers’ remittances.
She said the current account balance would achieve breakeven level in the coming months. Besides, financing from multilateral and bilateral creditors is expected to continue pouring in, depicting a positive outlook for the rupee.
Published in The Express Tribune, January 25th, 2024.
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