Rupee hits six-month highwith gains of Rs0.22

Currency under new cycle of appreciation for past one month

KARACHI:

Pakistani currency appreciated Rs0.22 and hit a new six-month high at Rs277.52 against the US dollar in the inter-bank market on Friday in the wake of increase in supply of foreign currency.

With the fresh rise, the local currency has gained a net Rs1.25 (or 0.45%) in the past one month under a renewed cycle of appreciation since touching the six-month low at Rs278.77/$ about a month ago, according to the State Bank of Pakistan's (SBP) data.

Exchange Companies Association of Pakistan (ECAP) reported that the rupee edged up Rs0.02 on a day-on-day basis to Rs279.84/$ in the open market.

The latest increase in the local currency, particularly in the inter-bank market, came after the central bank reported that its foreign exchange reserves surged $1.17 billion to a 30-month high at $10.70 billion mainly due to the receipt of the first loan tranche of $1.03 billion from the International Monetary Fund (IMF).

It was the 10th consecutive week of improvement in forex reserves, which surged a cumulative $1.67 billion (or 19.55%) over two and a half months compared to $9.03 billion in mid-July 2024.

Almost one-third of the growth in reserves was driven by robust remittances from overseas Pakistanis, Roshan Digital Account (RDA) inflows and the improvement in export earnings in recent months, suggesting the increase in reserves and the rupee-dollar parity is sustainable.

Market talk indicates that exporters are selling US dollars at a reduced premium on futures counters in anticipation that the local currency may gain further ground in the coming weeks ahead of healthy foreign currency inflows from multilateral and bilateral creditors.