Rupee stable at 3-month high
Pakistani currency hit over three-month high at slightly above Rs279.50 against the US dollar in the inter-bank market on Friday, as an increase in foreign currency inflows compared to its demand kept supporting the local currency.
According to State Bank of Pakistan’s data, the rupee gained 0.03%, or Rs0.08, and closed at Rs279.59 against the greenback.
The latest uptick in the currency came after Pakistan reported that the central bank’s foreign exchange reserves increased 3%, or $243 million, to a six-month high at $8.27 billion, indicating that the supply of the greenback was on the rise.
The rupee has cumulatively surged 9.84%, or Rs27.51, in the past four and a half months compared to the all-time low of Rs307.10/$ touched in the first week of September 2023.
Read Rupee rises for sixth day in a row
In the open market, however, the currency maintained its downturn for the second consecutive day. It lost 0.08%, or Rs0.23, to close at Rs281.17/$, according to the Exchange Companies Association of Pakistan. With this, the difference between rupee-dollar exchange rates in the inter-bank and open markets widened to 0.56% (or Rs1.58). The gap remained well below the ceiling of 1.25% recommended by the IMF.
Market talk suggests that the rupee will remain stable around current levels until the general elections scheduled for February 8, 2024. The rupee-dollar exchange rate will take cue for future direction from the new government’s economic policies.
According to market people, the next monetary policy, to be unveiled by SBP on Monday (January 29), may also provide a clear direction to the rupee in the short term. They are anxiously awaiting the central bank’s decision to see whether it leaves the policy rate unchanged at the record high of 22% or makes a reduction.
Published in The Express Tribune, January 27th, 2024.
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