Rupee rebounds as gold dips
A currency dealer counts Pakistani rupees and US dollars at his shop in Karachi PHOTO: REUTERS
Pakistani currency appreciated Rs0.20 to close at a one-week high at Rs277.64 against the US dollar in the inter-bank market on Friday, ending a brief one-day downward trend in the wake of increase in supply of the greenback.
According to the State Bank of Pakistan's (SBP) data, the currency had dropped to Rs277.84/$ on Thursday.
On the other hand, gold dropped Rs800 to Rs282,300 per tola (11.66 grams) in line with the global trend, maintaining the downward trend for the second successive working day.
The rebound in the rupee was recorded after the central bank reported on Thursday that Pakistan's foreign exchange reserves, held by SBP, increased $18 million week-on-week to a new two-and-a-half-year high at $11.04 billion.
This was the 13th consecutive week of surge in foreign exchange reserves, cumulatively rising by $2 billion over three months. The development suggests there is ample supply of the greenback in the banking system.
Secondly, Finance Minister Muhammad Aurangzeb has formally applied to the International Monetary Fund (IMF) for a $1 billion climate financing to fix relevant issues. The likely award of financing would increase inflows of funds from global creditors, resulting in a further rise in foreign exchange reserves and supporting the rupee against the greenback.
To recall, the rupee has largely remained stable in the range of Rs277-279/$ for the past seven months. Commentators anticipated the currency would remain stable at around current levels till the end of December 2024.
According to the All Pakistan Saraf Gems and Jewellers Association, bullion has cumulatively lost Rs3,100/tola in the past two working days. The development came in light of a fall of $31 to $2,726/ounce (31.10 grams) in the international market in the two days.
Market experts have ruled out a massive drop in the precious metal under the ongoing cycle of downturn. They believe a major correction would be seen early next year. The long-term trend, however, remains expansionary for the commodity.