PKR continues winning streak against USD, gains another 0.37%

The Pakistani rupee continued its merry run against the US dollar, appreciating another 0.37% in the inter-bank market on Monday. This is the rupee’s 23rd successive increase against the greenback, and makes it one of the longest appreciation runs in history.

As per the State Bank of Pakistan (SBP), the rupee settled at 281.65 after an increase of Rs1.04 in the inter-bank market.

Last week, the Pakistani rupee gained 1.8% during the five sessions to close at 282.69 against the US dollar in the inter-bank market.

At the same time, gap with rates in the open market have narrowed to negligible levels, meeting a key condition of the programme with the International Monetary Fund (IMF).

The increase has come on the back of administrative measures including a crackdown on smuggling and structural reforms in the Exchange Companies’ sector.

Meanwhile, during the previous week, the Ministry of Finance asked all ministries to implement all the IMF as the first review under the Standby Arrangement (SBA) becomes due.

“This is the rupee’s longest appreciation run against the US dollar since the 2000s,” Fahad Rauf, Head of Research at Ismail Iqbal Securities Limited, told Business Recorder.

“Essentially, it is a recovery rather than appreciation, as the PKR was previously overshot in the open-market.”

The market expert said the government’s crackdown in the open market against currency speculators and hoarders helped this recovery.

“However, the room for further improvement is narrowing as the Real Effective Exchange Rate (REER) is nearing 100. If the crackdown persists, the unusual volatility widely seen in the open market would come down,” he said.

The market expert highlighted that the currency remains vulnerable fundamentally, as the country has yet to see a significant increase in exports and remittances, while imports remain high.

Globally, the safe-haven US dollar edged higher on Monday as violence in the Middle East spooked markets, while a blowout US jobs report gave the greenback a further leg up.

The dollar index was last 0.11% higher at 106.21, drawing additional support from Friday’s data showing US employment increased by the most in eight months in September, potentially setting up for a higher-than-expected inflation print later this week.

Oil prices, a key indicator of currency parity, surged more than 2% on Monday as military clashes between Israel and the Palestinian Hamas group ignited fears of a wider conflict in the Middle East.

Inter-bank market rates for dollar on Monday

BID Rs 281.65

OFFER Rs 281.85

Open-market movement

In the open market, the PKR gained 1.00 rupee for both buying and selling against USD, closing at 277.50 and 280.50, respectively.

Against Euro, the PKR gained 2.00 rupees for both buying and selling, closing at 293.00 and 296.00, respectively.

Against UAE Dirham, the PKR gained 30 paisa for both buying and selling, closing at 76.20 and 76.90, respectively.

Against Saudi Riyal, the PKR gained 40 paisa for both buying and selling, closing at 74.10 and 74.80, respectively.

Open-market rates for dollar on Monday

BID Rs 277.50

OFFER Rs 280.50