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Pakistani currency hit a five-month low at Rs278.77 against the US dollar in the inter-bank market on Wednesday, maintaining its losing streak for the third consecutive day. Though the three-day cumulative losses stood nominal at Rs0.24/$, the local currency reached the level last seen in late March 2024.
Talking to The Express Tribune, Arif Habib Limited Head of Research Tahir Abbas said the losses remained modest and the currency had largely remained stable in the range of Rs278-279/$ for more than five months. He projected that the rupee would continue to move around current levels over the next three months till the end of December 2024.
Abbas pointed out that Pakistan's trade deficit had dropped to $1.5-1.6 billion in August with a notable surge in export earnings while imports remained stable.
This suggests that supply of the greenback has remained higher than its demand in the inter-bank network, helping the rupee stay stable in the short to medium term. He, however, anticipated that the currency may resume its gradual depreciation from January 2025 onwards and could drop by 4-5% by the end of current fiscal year in June next year.
Based on the narrowing of trade deficit, he expected a current account surplus of $150-200 million for August, which would support the rupee to strengthen its position. Separately, the government raised Rs835 billion through the sale of treasury bills in an auction on Wednesday, exceeding the target of Rs700 billion by 19%, according to AHL Research.
The cut-off yield on three-month T-bills slightly decreased by one basis point (bps) to 17.4799% while yields on the six-month and 12-month papers remained unchanged at 17.7399% and 16.9989%, respectively.
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