KARACHI: The US dollar depreciated against the Pakistani rupee, reaching a 9-month low, Express News reported on Tuesday.
The rupee-dollar parity now stands at Rs99.90 in the interbank market, decreasing by Rs1.52 today.
Speaking to The Express Tribune, Standard Chartered Bank Senior Economist Sayem Ali had said the rally is driven more by sentiments, as macros remain largely weak.
“Sentiments have shifted due to positive IMF staff reviews, expectations of significant aid and investment inflows in 2014, and interventions by the State Bank of Pakistan (SBP) through the forward/swap market,” Ali had said.
An inflow of investment in fiscal year 2013-14 also helped shift market sentiments in favour of the rupee. According to the SBP, Pakistan received foreign direct investment (FDI) of $523 million in the first seven months of 2013-14. FDI amounted to $106.9 million in January alone.
In addition, the expected receipt of $550 million from the International Monetary Fund (IMF), along with the launch of Eurobonds amounting to $500 million likely next month, has also led to positivity in the foreign exchange market.
While appreciation of the rupee will contain inflation, a stronger currency will inevitably make exports less competitive.
“Hence, a widening trade gap will put more pressure on foreign exchange reserves, forcing the SBP to readjust the rupee to equilibrium levels,” Ali had noted.