Rupee rises vs dollar after multilateral inflows

Currency gains Rs0.13 as foreign exchange reserves hit two-year high

KARACHI:

Pakistani currency appreciated by Rs0.13 to close at Rs278.37 against the US dollar in the inter-bank market after the country received almost half a billion dollars from multilateral agencies, ending a three-day downturn in the currency. According to State Bank of Pakistan’s (SBP) data, the currency had closed at a 10-day low of Rs278.50 against the greenback on Thursday.

The latest recovery in the domestic currency was recorded after official inflows from multilateral agencies of $494 million boosted the country’s foreign exchange reserves to a two-year high of $9.39 billion. The inflows supported the domestic currency, strengthening it against the greenback and other global currencies.

Earlier, the currency had lost Rs0.16/$ in the first three consecutive working days (July 2-4) on speculation that rupee devaluation was imminent ahead of the country securing a new IMF bailout package of over $6 billion by the end of July 2024. Additionally, the demand for foreign currency for imports was gradually rising amid a slowdown in the supply of the greenback as exporters were holding dollars (instead of selling) in anticipation of the much-speculated devaluation.

Some financial experts, however, said the currency and imports both would remain stable in the short run (for up to six months) to manage with the available foreign exchange reserves, as the reserves have still remained low despite the boost from the multilateral inflows. The Exchange Companies Association of Pakistan (ECAP) reported that the local currency depreciated by Rs0.12 on a day-to-day basis, closing at Rs280.35/$ in the open market.