Rupee rebounds as foreign inflows strengthen supply

Forex reserves hit 30-month high, remittances and exports bolster rupee

KARACHI:

The Pakistani currency appreciated by Rs0.15 to Rs277.64 against the US dollar in the interbank market on Friday, ending a four-day losing streak, as the supply of foreign currency increased.

According to data from the State Bank of Pakistan (SBP), the domestic currency had cumulatively lost Rs0.27 over the previous four days.

The latest recovery follows the central bank's report that the country's foreign exchange reserves surged by $106 million on a week-on-week basis, reaching a 30-month high of $10.80 billion. The reserves have consistently improved over the past 11 weeks, increasing by a total of $1.78 billion in three months.

This trend indicates that the supply of foreign currency has remained higher than demand in the economy, partly due to healthy inflows from workers' remittances and export earnings.

The Exchange Companies Association of Pakistan (ECAP) reported that the local currency remained unchanged at Rs277.59/$ for the second consecutive day in the open market.

The rupee's rebound coincided with Saudi Arabia signing agreements to invest $2.2 billion in Pakistan, increasing the flow of foreign direct investment (FDI) into the country. Foreign investment tends to boost traders' confidence in the rupee compared to foreign currencies.

The FDI inflows are expected to help stabilise the country's foreign exchange reserves, enhancing global investors' confidence in the domestic economy and supporting the rupee's strength.