The Pakistani currency reached a new five-month high at Rs278.14 against the US dollar in the interbank market, continuing its winning streak for the seventh consecutive working day, driven by persistent improvements in the country’s foreign exchange reserves.
Market discussions suggest that the rupee received further support against the greenback following Finance Minister Muhammad Aurangzeb’s announcement of issuing Panda bonds worth $250-300 million in the Chinese market soon.
According to the State Bank of Pakistan’s (SBP) data, the domestic currency rose by 0.05% or Rs0.14 on a day-to-day basis, closing at Rs278.14 against the greenback.
As a result, the currency has gained a cumulative 10.40% or Rs28.93 in the past six-and-a-half months compared to the all-time low closing at Rs307.10/$ recorded in the first week of September 2023.
The Exchange Companies Association of Pakistan (ECAP) reported that the local currency increased by 0.04% or Rs0.13 during the day, closing at Rs280.73/$ in the open market.
Read Rupee rises to new five-month peak
Pakistan’s foreign exchange reserves (held by SBP) continued to improve for the second consecutive week, increasing by $105 million in a single week, reaching a five-week high at $8.02 billion on March 15, 2024.
The improvement in reserves suggests that foreign currency inflows have remained stronger than demand in the system, as exporters are selling a higher quantity of dollars on forward counters. Additionally, overseas Pakistanis are sending more funds to their family members in the homeland to meet Ramazan and Eid expenditures.
Market discussions suggest that the rupee has the potential to test Rs277/$ on the upside in the ongoing cycle of appreciation.
Gold price declines
The gold price decreased by Rs4,200 per tola (11.66 grams), dropping
to Rs228,200 in Pakistan on Friday from a six-and-a-half-month high reached at Rs232,400 tola
on Thursday.
The decline in bullion prices aligns with the global trend, as it fell by $40 to $2,185 per ounce (31.10 grams) in world markets, according to the All Sarafa Gems and Jewellers Association.
The upward trend in the rupee partly supported the downward correction in the precious metal in Pakistan, as the country meets its demand through imports.
Published in The Express Tribune, March 23rd, 2024.
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