After hitting an all-time low on Friday, the Pakistani rupee registered some improvement against the US dollar on Monday, closing with a gain of 0.46% in the inter-bank market.
As per the State Bank of Pakistan (SBP), the currency settled at 275.30 against the US dollar, an improvement of Rs1.28. The currency has depreciated by 25.47% during the ongoing fiscal year against the greenback.
“It seems that the process of exchange rate correction has initiated, after exporters encashed their payments in large numbers, leading to selling pressure in the inter-bank market,” Zafar Paracha, General Secretary, Exchange Companies Association of Pakistan, said in a statement.
“The upward momentum is expected to continue in coming days,” he added.
The currency dealer expressed optimism that Pakistan will reach a staff-level agreement with the IMF (International Monetary Fund) by February 9.
“This will bring a positive wave, however we would also face a further spike in inflation, which the authorities need to manage,” he said, while urging stakeholders to design long-term policies for the country.
The rupee appreciation comes after the the currency slipped to an all-time low against the US dollar on Friday, closing at 276.58, a decline of Rs5.22 or 1.89%.
Overall last week, the rupee had recorded a cumulative fall of 5.05%.
Low levels of foreign exchange reserves, which fell another $592 million to a mere $3.09 billion, followed by remarks made by Prime Minister Shehbaz Sharif about the IMF giving Pakistan a tough time over unlocking a $1-billion loan had added to investor concerns.
Talks with the IMF continued amid reports that the Washington-based lender was insisting on reforms and prior conditions over several key areas including taxation, power sector, and energy prices.
Analysts believe the rupee is likely to stay under pressure until clarity is achieved on the IMF programme.
Globally, the dollar extended its rally on Monday after a strong US jobs report suggested the US Federal Reserve could stay hawkish for longer, while the yen was hit by news the Bank of Japan’s Deputy Governor Masayoshi Amamiya was being sounded out to be the next governor.
On Friday, the US Labor Department’s closely watched employment report showed that nonfarm payrolls surged by 517,000 jobs last month. Against a basket of currencies, the US currency touched a nearly 4-week high of 103.22 and was last at 103.18.
Oil prices, a key indicator of currency parity, inched up in early trade on Monday after falling around 8% last week to more than three-week lows as jitters over major economies outweighed signs of a demand recovery in China, the world’s top oil importer.
Inter-bank market rates for dollar on Monday
BID Rs 275.40
OFFER Rs 277.40
Open-market movement
In the open market, the PKR lost one rupee for buying while remaining unchanged for selling against USD, closing at 281 and 283, respectively.
Against Euro, the PKR lost 50 paisas for both buying and selling, closing at 294.50 and 297 respectively.
Against UAE Dirham, the PKR lost 30 paisas for both buying and selling, closing at 75.80 and 76.50, respectively.
Against Saudi Riyal, the PKR lost 30 paisas for buying and 20 paisas for selling, closing at 73.60 and 74.20, respectively.
Open-market rates for dollar on Monday
BID Rs 281
OFFER Rs 283