The rupee continued to recover in the interbank market on Thursday, extending its gains against the dollar for the fifth straight session.
At 12:55 PM, the local currency had gained Rs4.6 against the dollar to reach Rs224.2, according to the Forex Association of Pakistan (FAP).
In the open market, the dollar was trading at Rs221 around the same time.
A day earlier, the local currency jumped Rs 9.59 or 4.2 percent in the interbank market – the largest one-day gain in years – to close at Rs 228.80.
Fahad Rauf, head of research at Ismail Iqbal Securities, said: Reuters It was the rupee’s highest rally since 1999 in both absolute and percentage terms, according to central bank data.
After two weeks of beating against the dollar, the rupee fell to its lowest level against the dollar on July 28, closing at 239.94. After that, it started to bounce back from Friday and rose by Rs11.5 until Wednesday.
General Secretary of the Exchange Companies Association of Pakistan (Ecap), Zafar Paracha, said one of the reasons for the rupee’s recovery was the lower import bill for July, which is expected to fall further in August.
“We don’t need to import oil” [in August] as we have stocks for about two months. The prices of edible oil, pulses, gas and coal have fallen internationally. For example, the import bill has been reduced and the pressure on the rupee has decreased.”
Data released Tuesday by the Pakistan Bureau of Statistics (PBS) shows the July import bill fell 12.81 percent to $4.86 billion, from $5.57 billion in the same month last year. . On a monthly basis, the import invoice fell by 38.31 pc.
Paracha also appreciated the role of the State Bank of Pakistan (SBP) in this regard. The central bank had been active for the past two to three days and had issued a joint statement with the Treasury Department on Sunday saying that there was no risk of default and that the country’s financing needs would be more than fully met in the current fiscal year. are covered. , he noticed.
“This has also helped. The government has also played a positive role.”
However, Ecap’s secretary general said the rupee was still undervalued and should recover to Rs190 in the short term and to Rs160 in the long term. “Nowhere in the region is the dollar more expensive than in Pakistan,” he said.
Komal Mansoor, head of research at Tresmark, said exporters have been selling dollars in the ready-made and futures markets since the International Monetary Fund (IMF) statement that Pakistan had completed the final preliminary action needed for the assessment.
“The increased supply, coupled with the limited outflow, has further strengthened the rupee,” she noted.
More to follow.