Rupee appreciates as forex reserves rise

The Pakistani currency appreciated by Rs0.21, closing at Rs278.40 against the US dollar in the inter-bank market on Friday. This appreciation follows an increase in the supply of foreign currency in the domestic economy, ending a two-day downward trend.

According to the State Bank of Pakistan’s (SBP) data, the domestic currency had hit a two-week low at Rs278.61 against the greenback after losing Rs0.10 on Thursday. The latest improvement in the currency was recorded after the central bank reported that the country’s foreign exchange reserves (held by SBP) improved by $16 million in the week ending July 5, 2024, rising to a two-year high of $9.40 billion.

The uptick in reserves is attributed to robust inflows of workers’ remittances sent home by overseas Pakistanis. These improved inflows have created a surplus supply of foreign currency in the system, allowing the central bank to purchase the surplus greenback and boost foreign currency reserves.

The Exchange Companies Association of Pakistan, however, reported that the local currency remained unchanged at Rs280.50/$ for the second successive day in the open market.

Meanwhile, gold prices increased by Rs2,200 per tola (11.66 grams) to Rs249,000 in Pakistan in line with global trends on Friday. The precious metal has cumulatively surged by Rs4,000 per tola in the past three working days.