9-month high: Rupee strengthens to 99 against dollar

Published: March 11, 2014
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Expects to gather $10.1 billion through remittances, auction of 3G licences and outstanding CSF payments. PHOTO: FILE

Expects to gather $10.1 billion through remittances, auction of 3G licences and outstanding CSF payments. PHOTO: FILE

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.

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Reader Comments (64)

  • Hallaj
    Mar 11, 2014 - 10:42AM

    Now, that’s where it should stand as an equilibrium exchange rate parity. I think the depreciation we observed during the last 7-8 months was more due to the expectations rather than macro-fundamentals.

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  • Amin
    Mar 11, 2014 - 11:01AM

    I wish if petrol and other product prices also come down as dollar value falls because price goes up as soon as dollar goes up-

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  • Mar 11, 2014 - 11:15AM

    These inflows are not backed up by strong fundamentals, like energy and power, security situation, transportation to name a few pressing problems. The inflows of FDI, remittances, and exports will…whoosh! evaporate against a slowdown of inflows and weak infrastructure base. A mid-rate parity can be expected by the SBP. Salams

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  • Ajab Khan Baloch
    Mar 11, 2014 - 11:24AM

    Sheikh Rashid on TV show had given a public commitment that he will resign if US$ rate falls below Rs 100
    He should honour his word and resign

    Ishaq Dar has done good work

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  • Ahmed
    Mar 11, 2014 - 11:27AM

    All the bankers like this CEO of SCB are crying because they are losing money on their dollar holdings. Rupee has to be strong to contain inflation. At least the SBP will be able to buy dollars and float rupee in market. This will lead to lower interest rates which is always a good thing for business. Rest assured the rise of foreign exchange reserves will stabilize the economy… remember 2001-2002 under shaukat aziz similar stuff happened. Guys our economy will perform better. Inshallah. Well done Ishaq Dar. And I voted for PTI.

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  • Kaleem
    Mar 11, 2014 - 11:36AM

    So, Ishaq dar was right :P Playing his cards nicely

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  • Humza
    Mar 11, 2014 - 11:39AM

    @the Skunk: Actually a number of western papers have had positive reports about the economy and overall situation in Pakistan since the new government has taken over. It is seen as business friendly and committed to improving the economy.

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  • Hady
    Mar 11, 2014 - 11:43AM

    Just curious to hear announcement from Worthy Sheikh Rasheed to quit politics++++
    As dollar has depreciated below 100 so now its time for him to fullfil his promise ans spare our lives please++++

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  • X-Ray
    Mar 11, 2014 - 11:43AM

    Great achievement by PML-N economic team. Pakistani markets are always driven by perceptions/expectations rather than fundamentals.Recommend

  • who
    Mar 11, 2014 - 11:51AM

    @Hallaj:
    Yeah, because it’s not like forex reserves are only enough for 1 month’s worth of imports. It’s not like inflation in Pakistan is much higher than in the US. It must have been speculators that are to blame.

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  • Nauman
    Mar 11, 2014 - 12:24PM

    Shaikh Rasheed just 2 Rs shy from resigning!

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  • Yahudi Arabia
    Mar 11, 2014 - 12:38PM

    Wake me when the principal and interest payments are due, then I would ask how much strength is left in over printed rupee.

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  • Fahad
    Mar 11, 2014 - 1:00PM

    I am not an economist. Wanted to know how the rupee was stable in Musharraf era?

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  • pakistani
    Mar 11, 2014 - 1:10PM

    will sheikh rasheed resign if it touches 98? as he promised

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  • azim
    Mar 11, 2014 - 1:55PM

    its temporary,i fear

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  • Naveed Alam Khattak
    Mar 11, 2014 - 2:11PM

    Good Show by Ishaq Dar… We the PTI supporters appreciate the good job done by FM and his team. Keep it up…

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  • MAD
    Mar 11, 2014 - 2:27PM

    Currency falling in anticipation???? Now thats a first? Until the source of funds is not disclosed I shall remain sceptical.

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  • Blunt
    Mar 11, 2014 - 2:30PM

    Not to belittle anyone here, but can anyone please let me know how Ishaq Dar has done a good job, by inheriting the dollar at Rs.90 and shooting it upto Rs.110, and then bringing back to close to Rs.100?

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  • Ali
    Mar 11, 2014 - 3:10PM

    one more thing, 3G auction is expected to bring more than $ 1 billion. Plus if they manage to get $800 million from Etisalat (PTCL), then dollar may go down further.

    Just my thoughts, not an economist…Recommend

  • Uncle
    Mar 11, 2014 - 3:11PM

    @ Ajab Khan Balouch, Numan and all others

    you are associating the fall in $ rate with the efficiency of the goverment…But in fact it is due to the tension (Crises) between the Two super powers Russia and the US over ukraine and crimea… Recommend

  • Uncle
    Mar 11, 2014 - 3:12PM

    So Sheikh Rashid was and is right….Recommend

  • FFarooq
    Mar 11, 2014 - 3:43PM

    Ma Sha Allah

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  • Salman
    Mar 11, 2014 - 4:17PM

    Though this change is not backed up by the market forces of demand and supply nor the government intervention but just speculation, however, the fact that dollar touched Rs99 is a big achievement. As we are import oriented economy, we should make sure that our currency appreciates instead of depreciation. Good job Government. Recommend

  • bangash
    Mar 11, 2014 - 7:11PM

    Excellent news. I hope rupee appreciates further. Pakistan is an importing country and a strong rupee means we can more easily buy and import oil.

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  • Bunty
    Mar 11, 2014 - 7:29PM

    Here comes the laundered money back… this is because of huge amounts laundered abroad and now they are bringing it back… they will not pay any tax on it and rupee stablizes… Tax collection will be hampered… so inflation in next few months…Recommend

  • Oats
    Mar 11, 2014 - 7:56PM

    @Uncle: The strengthening rupee has nothing to do with Crimea. Let’s give credit where it is due. If Western newspapers are writing positive things about Pakistan’s economy for the last months, why should people in Pakistan doubt it.An economy focused government is making all the difference and it shows. Recommend

  • Mar 11, 2014 - 8:06PM

    How can we say that this progress is not backed by strong fundamentals? Export bills have been paid to the government while the exports have risen by 18% only during the month of February. Our GDP during the first half of the current fiscal year has almost doubled and the Chinese promise to invest $30 billion during the next 5 years has boosted the market sentiments. Besides, the Stock Market has been performing brilliantly for the last several months. Though our media hardly ever highlights the good things, but all these points were highlighted more than it is generally done. GSP Plus status by the EU has boasted the investors’ trust and there is positive rating by IMF as well.
    Most of us believe that IMF is anti-Pakistan. That may have been the popular narrative but the fact is that IMF helps all the developing countries and a positive rating by them means that we are on the right path.

    So when I see people commenting here that this progress is not backed by strong fundamentals, I really feel strange about the knowledge that people display while the knowledge they actually have of economics.Recommend

  • Travel
    Mar 11, 2014 - 9:18PM

    Dar vs Sheikh

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  • Besty
    Mar 11, 2014 - 9:31PM

    Dollar fall is temporary. Petrol price should decrease by 25%

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  • Shanet
    Mar 11, 2014 - 9:32PM

    If Dollar has truly depreciated, then “Petrol and Energy” prices must come down

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  • Mar 11, 2014 - 9:50PM

    This is fabricate situation I must say. There is no sign of economic strength, which may push USD on corner. That would, eventually, burst!

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  • Naeem
    Mar 11, 2014 - 10:02PM

    Well done Nawaz Sharif.
    Well done Ishaq Dar.
    Well done State Bank of Pakistan.
    Allah bless Pakistan.

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  • Maryam
    Mar 11, 2014 - 10:19PM

    All my prayers and best wishes for our Prime Minister. He will perform even better in the coming days.

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  • Mar 11, 2014 - 10:30PM

    This is bad for me and my online business. I’d have to push my limits and work even harder. I honestly don’t want this to be.

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  • youth
    Mar 11, 2014 - 10:47PM

    When dollar was going up, people were criticizing.
    Now dollar is coming down, still people are criticizing.
    This is baseless criticism.
    Criticism for the sake of criticism.
    We should encourage the government in achieving the objectives.
    Lots of love for Nawaz Sharif.

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  • Ahsan
    Mar 11, 2014 - 11:19PM

    It might be artificial because the rumors led investors to sell foreign exchange in open market, increased the dollar supply, price falls down, rupee strengthens but everything else remains the same. Its impact on export might lead the government to take it back. I really hope that rupee remains strong so there’d be a fall in inflation.

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  • Muslim Leaguer
    Mar 11, 2014 - 11:23PM

    Good to see the economy moving in the right direction under the able leadership of PMLN!

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  • Bilal Shafique
    Mar 11, 2014 - 11:27PM

    Being a banker and foreign trade officer its just my personal experience that when Dollar went down after some time it jumps double. But i will always support a good step for the betterment of my country by any government. Good work Dar saab

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  • Hafiz
    Mar 11, 2014 - 11:45PM

    @Sheikh Basit:
    what a selfish attitude

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  • Parvez
    Mar 12, 2014 - 1:13AM

    I don’t buy this………it looks like a created blip for a few to make quick money.

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  • Mar 12, 2014 - 2:50AM

    the rate is determined by supply and demand, there must be demand for the rupee which meant it strengthened. Buy and Sell orders are matched over the phone or electronically.

    Anyway as a nation, i think we pass judgment too easily we should see where the rupee is in one, two and three years from now. There will always be pressure on the rupee until exports become greater than imports.

    Anyway, my own view is that we need a new political party led by the 10000s of educated people who want real change. The old parties are dominated by old forces who want to maintain the status quo.

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  • Muhammad Ali
    Mar 12, 2014 - 5:57AM

    @Ajab Khan Baloch:
    So should nawaz and shehbaz sharif for making superficial claims in election campaigne..I hope u dont need to be reminded o them. Hint* josh e khitabat.

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  • Strategic Asset
    Mar 12, 2014 - 7:05AM

    Few points from the comments above:

    Not one person commenting seems to be an economist.
    Everyone seems to believe that the dollar going down is great for Pakistan without understanding that countries such as Japan have purposely devaluated their currency in order to spur exports.
    Not one person is commenting on the recent inflow of $1.5B. Where did this money come from? Is it a loan? Was anything promised in return for that amount?

    Seems to be a recurring theme with Pakistan similar to WoT, drones, etc that one does not look a gift horse in the mouth at the time of getting, but later blame others when things go sour.

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  • Kamlesh Kumar
    Mar 12, 2014 - 8:13AM

    I am happy that dollar rate is decreasing in Pakistan, that’s good, but what about the inflation? Inflation is still the same, and even increasing day by day. Declining of dollar rate is not having any change in the inflation.
    One more thing, many of the Pakistani have moved from Pakistan to foreign countries, just for their good future and currency, as though considering our economy in the last year.
    But now, what will happen to them, who are sending their earnings to their familes. Their families in Pakistan, will get 10% less amount as compared to previous one’s. And may be much less in future.
    So for those who are living abroad, just for the survival of their family, nowadays its going to be problem for them day by day. Just because of Pakistan is taking loans from other countries.
    If Pakistan economy is going good nowadays, as we all considering the dollar rate, then we want to see the improvment also, dollar rate is decreasing, but what about the inflation. Its same still, and even increasing.

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  • Unknown
    Mar 12, 2014 - 9:13AM

    Sheikh Rashid should resign till the dollar is less than 98, as soon as it will again go above 98, he should come back again. :)

    Let us see, after decreasing 10 rupees, how much high it will go. Finger crossed.

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  • Sheeda Tilli
    Mar 12, 2014 - 12:26PM

    Now Sheikh Rashid instead of keeping his word and resigning putting forward newer conditions. Recommend

  • Faisal Butt
    Mar 12, 2014 - 12:37PM

    @pakistani:
    yes he love to resign if shahbaz shreef change his name.. as he shouted so many time in his “josh e khitabat” speeches….

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  • Brother
    Mar 12, 2014 - 1:13PM

    Good work by federal government. It will help in combating inflation.

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  • Hello
    Mar 12, 2014 - 1:16PM

    Long live Pakistan.
    Long live Nawaz Sharif.

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  • clear
    Mar 12, 2014 - 1:25PM

    1.5 arabb , “arabi dollars”

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  • IndianTroll
    Mar 12, 2014 - 2:25PM

    Shouldn’t the “rupee” be changed to something like “dinar”, “dirham” or even “riyal”, considering that Pakistan thinks of itself as an Arabic nation?
    Just asking.

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  • observer
    Mar 12, 2014 - 4:29PM

    50Pak.Rupees = 1 US.D. That should be Pakistan’s aim.

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  • Imran
    Mar 12, 2014 - 4:42PM

    USD now declined to 97

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  • sha
    Mar 12, 2014 - 6:48PM

    After touching the bottom 97, the dollar has again gone up, and not available for buying at 100. bad luck to Pakistanis expecting too much, believe its all temporary.

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  • asian
    Mar 12, 2014 - 8:07PM

    most asian currencies have appreciated against dollar last weekRecommend

  • afzal
    Mar 12, 2014 - 10:11PM

    @Yahudi Arabia:
    agreed.

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  • afzal
    Mar 12, 2014 - 10:16PM

    @Bunty: agreed.

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  • afzal
    Mar 12, 2014 - 10:22PM

    I will believe when quality of life of common man improves. In governance one sees the outcome. In drama and film one hears the dialogue and sees the scene. Let us wait for the budget 2014-15.

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  • Umer
    Mar 12, 2014 - 10:32PM

    Daar family n businesses are in foreign countries, not only his but majority of pml.n n ppps, so what is making rupee to bounce back, auctions are around the corner

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  • sterry
    Mar 12, 2014 - 10:48PM

    @IndianTroll: Maybe you forget that the Muslim rulers who ruled South Asia for over 1000 years before the British used the rupee as the currency. Maybe India should change its currency unit instead.

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  • ali
    Mar 12, 2014 - 10:49PM

    Any banker or economist available on the forum? What do u predict? Given the drastic fall in the conversion factor, will it continue to do so? And will this be permanent or long lasting?

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  • ali
    Mar 12, 2014 - 10:56PM

    Any economist or banker on the forum? Guys what do you predict about the future of this falling conversion rate? Will it further fall,or come back to where it was, after taking this sudden fall or what?

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  • kafka
    Mar 13, 2014 - 12:24PM

    @Strategic Asset: 1.5 billion paid for the the weapons to be used against Bashar-ul-Asad. It this is true, rupee will be back to its old value (PKR 106= 1USD) soon.

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  • Naveed
    Mar 13, 2014 - 3:30PM

    Ishaq Dar has himself admitted that it has only happend coz one of our friends (I suspect Saudi Arabia) in this case has inflowed $1.5 billion in our reserves. That means it is only temporary and once this sentiment is over and the money is used…. we will be back to square one.

    I agree our economy is sentiment driven rather than fundamentals… but the real success will come when fundamentals (enery, power, foreign investments) help our econonmy to grow :)

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