The rupee continued on its merry recovery path against the US dollar, appreciating to close near the 226 level in the inter-bank market on Thursday.
As per the State Bank of Pakistan (SBP), the rupee closed at 226.15, an appreciation of Rs2.65 or 1.17% against the greenback.
In the last two sessions, the currency has appreciated Rs12.23 or 5.4% against the US dollar.
On Wednesday, the rupee witnessed a massive recovery, registering a day-on-day increase of Rs9.58 to close at 228.8.
“Due to demand contraction, the supply of dollars has improved, lifting market sentiment, and continued to positively affect the rupee,” said Trust Securities and Brokerage Limited (TSBL) in a note on Thursday.
“(However) political uncertainty and sentiment could hit the currency negatively going forward."
Meanwhile, oil prices, a key determinant of currency parity, have also retreated recently.
“WTI crude futures trading at $91/barrel on weak US factory data, global recession concerns, and supply disruptions are a sigh of relief for Pakistani markets on the external front,” said TSBL.
Moreover, recent action taken by the central bank against Exchange Companies (ECs) and banks has also helped improve the exchange rate in the inter-bank and open currency markets, analysts said.
The SBP on Wednesday said that it has increased the monitoring of foreign exchange operations of ECs and banks in view of recent volatility in the exchange rate and the difference between the inter-bank rate and the rate offered by ECs and banks to their customers.
In a statement, it said that after inspections of a number of exchange companies and banks since Monday (August 1, 2022), the SBP suspended the operations of four branches of two ECs (Galaxy Exchange Co and Al-Hameed International Money Exchange Co) for violation of SBP regulations.
Meanwhile, the Pakistan Business Council (PBC) appreciated the improvement in the currency and a decline in imports.
“Whilst any improvement in the economy is welcome, deep-rooted fundamental flaws remain and need a reform programme to correct,” the PBC said.
It added that import curbs are short-term solutions. “‘Make-in-Pakistan’ is more sustainable,” it added.
Inter-bank market rates for dollar on Thursday
BID Rs 225
OFFER Rs 227
Open-market movement
In the open market, the PKR gained 3 rupees for both buying and selling against USD, closing at 224 and 226, respectively.
Against Euro, the PKR gained 2 rupees for both buying and selling, closing at 224 and 226 respectively.
Against UAE Dirham, the PKR gained one rupee for both buying and selling, closing at 60.50 and 61, respectively.
Against Saudi Riyal, the PKR gained 1.80 rupees for both buying and selling, closing at 58.20 and 58.70, respectively.
Open-market rates for dollar on Thursday
BID Rs 224
OFFER Rs 226