KARACHI: The Pakistani rupee witnessed an optimistic week as it appreciated 2.71% against the US dollar to close at Rs269.28 in the inter-bank market. Barring one session, the local currency recovered throughout the week.
The rise came owing to recent correction of exchange rate following the end of the peg on dollar. Exporters are also selling their dollars in the market as they believe that the rupee is fairly valued. Amid the free-float of the exchange rate, inflows from illegal markets diverted towards formal channels.
Moreover, the International Monetary Fund (IMF) team was on a visit to Pakistan and market participants expected the resumption of bailout package. The programme remains stalled as the ninth review of Pakistan’s economy remained incomplete. Although the IMF team left without the signing of staff level agreement, Finance Minister Ishaq Dar notified the receipt of Memorandum of Economic and Financial Policies (MEFP).
Ongoing talks with IMF lent support to the rupee throughout the week. In addition, the government of Pakistan is expected to impose new taxes worth Rs170 billion which is far less than the market expectation of Rs300-400 billion. This proved to be a respite for the currency market and bolstered the local currency.
During the week, exporters also sold their dollars into the market, as they believed that the rupee is fairly valued.
Moreover, the foreign exchange reserves held by the State Bank of Pakistan (SBP) fell $170 million to a critical level $2.92 billion which is the lowest since February 2014. Low level of reserves have continued to place pressure on the local currency throughout the week.
Analysts expect the currency to remain under pressure until inflows from bilateral and multilateral institutions are materialised. Unless Pakistan sees surplus inflows there wouldn’t be sustainable appreciation, they said.
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THE RUPEE
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Weekly inter-bank market rates for dollar
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Bid Close Rs. 269.25
Offer Close Rs. 271.25
Bid Open Rs. 277.00
Offer Open Rs. 279.00
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Weekly open-market rates for dollar
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Bid Close Rs. 270.00
Offer Close Rs. 273.00
Bid Open Rs. 280.00
Offer Open Rs. 283.00
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Copyright Business Recorder, 2023
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