Rupee rises to Rs278.57 against dollar in inter-bank market

The Pakistani rupee appreciated by Rs0.10, reaching Rs278.57 against the US dollar in the inter-bank market, marking its second consecutive day of gains due to an increase in foreign currency supply within the domestic economy.

According to data from the State Bank of Pakistan (SBP), the rupee has cumulatively gained Rs0.20 over the past two days, recovering from a five-month low of Rs278.77 against the dollar on Wednesday.

The latest recovery in the currency followed a report from the central bank on Thursday, indicating that the country's foreign exchange reserves held by the SBP had increased by $33 million, reaching a 26-month high of $9.43 billion as of the week ending August 30, 2024. SBP reserves have been rising for the past six consecutive weeks, growing by a total of $409.6 million over the last month and a half.

The surge in foreign currency supply, driven by increased export earnings and strong inflows of workers' remittances, has bolstered the central bank's reserves and provided support to the rupee against the dollar.

This appreciation in the rupee coincides with reports that Standard Chartered Bank has agreed to lend $1 billion to Pakistan, helping the country bridge a financing gap over the next three years. This development is expected to pave the way for the International Monetary Fund (IMF) Executive Board to approve the $7 billion loan programme for Pakistan.

The IMF programme is projected to unlock additional debt financing from other multilateral and bilateral creditors. These factors are expected to have a positive long-term impact on the rupee-dollar exchange rate.

However, the Exchange Companies Association of Pakistan (ECAP) reported that the rupee depreciated by Rs0.68 in the open market, closing at Rs280.94 per dollar for the day.