The Pakistani currency finally receded from its three-month high, settling slightly above Rs279.50 against the US dollar in the interbank market due to a noticeable surge in demand for foreign currency, bringing an end to an almost month-long winning streak on Monday.
According to State Bank of Pakistan (SBP) data, the domestic currency edged down by 0.02%, or Rs0.05, closing at Rs279.64 against the greenback.
Earlier, the currency had gained a net of 9.84%, or Rs27.51, in the past four months, reaching a three-month high at Rs279.59/$ on Friday.
The Exchange Companies Association of Pakistan reported an opposite trend in the currency. The rupee improved by 0.02%, or Rs0.07, closing at Rs281.09/$, ending the two-day long downward streak in the open market.
The drop in the open market is observed after the demand for foreign currency increased, with foreign companies operating in Pakistan seeking to repatriate profits to their headquarters abroad. Secondly, the demand for imports has also risen recently, it was learnt.
Speaking at a press conference on Monday, State Bank of Pakistan (SBP) Governor Jameel Ahmad stated that profit repatriation has significantly increased in the first six months (Jul-Dec) of the current fiscal year 2023-24.
The central bank’s latest data indicates that repatriation has surged by 2.60 times, reaching $350 million in the first six months, compared to $217.6 million in the same period of the last year.
Ahmad added that import payments have surged by $700-800 million per month to $4.4-4.5 billion per month, compared to $3.7-3.8 billion in the recent past.
However, he believed that inflows of workers’ remittances sent home by overseas Pakistanis would increase to around $28 billion in FY24, compared to $27 billion in FY23. Earlier, the rupee had strengthened due to an increase in inflows from multilateral and bilateral creditors and improvements in export earnings and workers’ remittances.
Published in The Express Tribune, January 30th, 2024.
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