Rupee gains slightly as market sentiment improves

Strengthens by Rs0.16 as forex reserves, export earnings rise

KARACHI:

The Pakistani rupee appreciated by Rs0.16, closing at Rs278.54 against the US dollar in the inter-bank market, marking a positive shift from the recent downward-to-stable trend observed over the past few days.

According to State Bank of Pakistan (SBP) data, the domestic currency had previously closed at Rs278.70 against the greenback for two consecutive working days, Tuesday and Thursday. The market remained closed on Wednesday in observance of Independence Day.

The latest appreciation comes as the country's foreign exchange reserves, held by the SBP, increased by $119 million, reaching a four-week high of $9.27 billion.

The 12% increase in the country's export earnings, which reached $2.30 billion in July compared to the same month last year, also bolstered sentiment in favour of the rupee within the currency market. The rise in export earnings, coupled with inflows of workers' remittances, has led to an increased supply of the US dollar in the market. This uptick in supply has outpaced demand, which has been muted due to subdued imports over the past several months. As a result, the central bank has been able to purchase the surplus foreign currency to stabilise its foreign exchange reserves.

To date, the rupee has seen a nominal net decline of Rs0.20 in the current fiscal year, fluctuating within a narrow range of Rs278-278.74/$ during the review period.

Meanwhile, the ECAP reported that the local currency has remained stable at Rs280.40/$ in the open market for the ninth consecutive working day.