The Pakistani currency appreciated by Rs0.17 to Rs278.33 against the US dollar in the inter-bank market on Friday, ending a three-day losing streak due to an improvement in the supply of greenback in the domestic economy. According to State Bank of Pakistan data, the currency has recovered from Thursday’s closing level of Rs278.50, which was a two-and-a-half-month low.
Overall, the currency has gained 10.33% or Rs28.77 in the past nine months, up from a record low closing of Rs307.10/$ in the first week of September 2023. This recovery has been recorded after foreign investors injected new capital into rupee-based government debt securities like treasury bills in May 2024, increasing the foreign currency supply in the system. The outlook suggests that foreign investment flow into local bonds will increase further after the government secures a new IMF loan programme in June-July 2024.
Additionally, the partial recovery in the currency coincides with reports of upcoming Chinese investment. The government has approved new projects worth $2 billion under CPEC ahead of PM Sharif’s visit to Beijing. Earlier, the government announced plans to launch a Panda bond in the Chinese market to raise new financing worth $300 million to $500 million.
The currency market, however, ignored a nominal drop in the foreign exchange reserves. The Exchange Companies Association of Pakistan reported that the local currency remained unchanged at Rs279.49/$ in the open market.
Published in The Express Tribune, June 1st, 2024.
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