Rupee strengthens as dollar continues to shed value

Updated May 27, 2019

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The greenback traded at Rs149.60 in the interbank, posting a decrease of Rs1.30. — AFP/File
The greenback traded at Rs149.60 in the interbank, posting a decrease of Rs1.30. — AFP/File

Falling demand coupled with a surge in supply pushed dollar's price in open market on Monday to Rs149.50 — down half a rupee from the Rs150 rate in the preceding session.

In the interbank market, the greenback traded at Rs149.60 as compared to Rs150.90 in the last session, posting a decline of Rs1.30.

According to currency dealers, overseas Pakistanis are sending additional amounts of remittance ahead of Eidul Fitr — boosting the supply of dollars in the open market.

The second major reason behind the falling value of the dollar, as per the dealers, was the shrinking demand as the State Bank of Pakistan (SBP) has tightened the rules and regulation for opening letters of credit (LC) for import.

Zafar Paracha, the Exchange Companies Association of Pakistan's secretary general, told DawnNewsTV that the greenback could lose its value by another three to four rupees, if the prevailing trend continues.

The rupee’s erosion appears to have ceased due to the excess supply of dollars in the open market amid seasonal effect of Ramazan followed by disappearing interest from buyers.

“The inflow is high while the demand is almost at zero level. I believe currency dealers will deposit up to $5 million surplus per day in the banks till Eid,” Zafar Paracha had said recently.

Buyers have already lost interest in dollar after rupee gained Rs4 against the greenback in the last week.