The rupee jumped by another Rs2.54 against the dollar in the interbank market on Wednesday — an uptrend that has continued for nearly two weeks.
The local currency was being traded at Rs221.50 as of 10:32am, up 1.13 percent from the previous close, according to the Forex Association of Pakistan (FAP).
Zafar Paracha, general secretary of the Exchange Companies Association of Pakistan (Ecap), claimed that the currency was strengthening because interbank market sentiment had shifted.
“There are lots of sellers but not many purchasers. “Supply exists but demand does not in the interbank market,” he remarked.
Paracha explained that importers were holding off on buying dollars until the exchange rate stabilized while exporters, who had previously halted depositing their payments, had started selling them.
“Despite the fact that we haven’t yet received funding from the IMF, we’ve met all of its requirements. By the end of the month, the IMF has promised to send us the funds. Additionally, friendly nations have stated they will provide funds, whether as a loan or an investment.
He also mentioned the United Arab Emirates’ plans to invest $1 billion in a number of Pakistani businesses, claiming that all of these things were beneficial.
The currency dealer added that the market also anticipated an improvement in the political climate. This indicated that the pressure on the rupee will reduce and that it would potentially appreciate to Rs200 against the dollar, Paracha added. The government also indicated that it has the funds to complete all of its obligations this year.
The rupee’s value compared to the dollar has increased in recent sessions, according to Mettis Global Director Saad bin Naseer, due to import compression and anticipated bilateral and multilateral inflows.
“The efforts undertaken by the State Bank of Pakistan (SBP) and the Ministry of Finance to curb the freefall have begun to bear results,” he said. However, Naseer said the central bank should take measures to contain the rupee’s value in the open market where exporters continued to sell the greenback at higher rates.
“The SBP should take measures to ensure that exchange companies do not fleece buyers to make hefty profits,” he added.
According to Tresmark’s head of research Komal Mansoor, “Sentiments have changed their tune in response to the good news flow. We anticipate the market to move toward 222-225 levels despite the rupee’s fair value on the REER index being 205 due to external vulnerabilities and inflation trends.
The rupee had been battered against the dollar for two weeks when, on July 28, it reached its lowest point ever, closing at Rs239.94. Since then, though, this tendency has reversed, with the local currency increasing by Rs15.09, or 6.62 percent, up to August 5.
The rupee gained a record Rs9.59 on August 3, the day that saw the highest increase.