Rupee recovers from one-month low

Gains Rs0.17 to Rs278.30/$ on prospects of UAE investment

Our Correspondent May 24, 2024


Pakistani currency on Thursday regained Rs0.17 and closed at Rs278.30 against the US dollar in the inter-bank market, recovering from the one-month low as Prime Minister Shehbaz Sharif reached the United Arab Emirates (UAE) to seek foreign investment.

According to the State Bank of Pakistan (SBP)’s data, the rupee stood at a one-month low at Rs278.47 against the greenback on Wednesday.

PM Shehbaz said in Abu Dhabi that he was in the Gulf Arab nation to draw investment and forge partnerships instead of asking for loans, which instilled confidence in the domestic financial market.

The currency has remained largely stable for quite a long time and moved in a narrow band of Rs278-278.47/$ over the past couple of weeks.

The currency movement in a narrow range indicates that market forces (mostly commercial banks) are determining the rupee-dollar parity in connection with demand and supply of the foreign currency.

The exchange rate fluctuation is in line with the recommendation of the International Monetary Fund (IMF), with which Pakistan has initiated talks for securing a new loan programme of $6-8 billion spanning three to four years.

The loan programme is aimed at continuing to repay foreign debt on time without any interruption and finding a cushion to ramp up economic activities.

Read Rupee weakens for second straight day

The currency has appreciated 10.35%, or Rs28.80, in the past more than eight months compared to the record low close at Rs307.10/$ in the first week of September 2023.

The IMF has assumed that the Pakistani rupee will depreciate to Rs329/$ in the next 13 months (by the end of June 2025), as it sees an increase in demand for the greenback following the full-scale reopening of imports in the coming months.

Former minister Ashfaq Tola, however, believes that the rupee may extend gains to Rs235/$ if the central bank refrains from absorbing the surplus supply of US dollars and buys them with some delay.

The Exchange Companies Association of Pakistan (ECAP) reported that the local currency ticked down Rs0.01, closing stable at Rs279.55/$ in the open market.

Published in The Express Tribune, May 24th, 2024.

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