Rupee up slightly on robust remittances

Pakistani currency ticked up Rs0.03 to a new two-week high at Rs278.37 against the US dollar in the inter-bank market on Thursday, maintaining its winning streak for the third consecutive day on the back of increasing workers’ remittances in June.

According to the State Bank of Pakistan’s (SBP) data, the rupee had closed at Rs278.40 against the greenback on Wednesday.

Exchange Companies Association of Pakistan (ECAP) reported that the local currency appreciated Rs0.09 on a day-on-day basis in the open market, closing at Rs280.18/$.

Talking to The Express Tribune, ECAP General Secretary Zafar Paracha said the rupee had remained strong in the wake of stability in inflows of foreign currency contrary to expectations of a significant drop post-Eidul Azha.

“Workers’ remittances are robust against expectations for a (significant) drop in June...after they hit a record high at $3.24 billion in May ahead of Eidul Azha in mid-June,” he said.

Paracha pointed out that improved inflows had enabled currency dealers in the open market to sell $500 million a month in the inter-bank market for the past seven to eight months.

It came following the launch of a government’s crackdown on currency smugglers in September 2023.

Prior to that, the dealers were hardly surrendering $100 million a month owing to the massive smuggling of foreign currency to bordering countries such as Afghanistan and Iran.

The rupee has gained 10.30% (or Rs28.73) in the inter-bank market in the past nine and a half months since hitting the record low close at Rs307.10/$ in the first week of September 2023.

Paracha emphasised that pressure on the rupee would stay comparatively lower in July against expectations of high currency volatility.

He said the outlook for rupee-dollar parity had improved ahead of securing the next International Monetary Fund (IMF) loan programme for Pakistan. To pave the way for the programme, “Finance Minister Muhammad Aurangzeb presented a better budget (in consultation with the Fund).”

He believes that the Special Investment Facilitation Council’s (SIFC) initiative to attract foreign investment was expected to bear fruit soon and the country would see the inflow of significant foreign investment.