KARACHI: The rupee continued to strengthen against dollar on Tuesday hitting six-month high of Rs159.93 in the inter-bank market while bankers believe it could appreciate further to Rs158.

The dollar was traded below Rs160-mark (Rs159.93- Rs159.96) in the inter-bank market.

“The surplus liquidity due to higher inflows and low outflows due to absence of Hajj, Umrah, tourism, fresh educational travelling and health, kept the dollar demand much lower than usual in the country,” said a senior banker.

He added that a crackdown over illegal transactions of dollars (hundi and hawala) increased the inflow of dollars from legal channels. “We [bankers] believe that the annual transactions of hundi and hawala are around $4 billion per year,” he said.

In addition, the weakening demand for the greenback in the international markets has also put pressure on the US currency.

Bankers said that since January, oil prices crashed to their lowest level whereas the commodity is still trading in the $35-40 per barrel range which has significantly reduced the dollar demand globally and helped Pakistan slash its import bill.

Exporters are unhappy with current situation as their income in terms of rupee has declined by six per cent in six months. On the other hand, the government is incentivising various sectors to increase overall exports of the country.

Adviser to PM on Commerce Razzak Dawood appreciated exporters as exports crossed the $2bn mark in October after July. He said the increase in exports was a great success for the country a exports have now increased to the pre-Covid-19 levels.

Sources in the financial sector claimed that the IMF had sought further devaluation of the rupee.

“If the demand of devaluation is honored, the dollar would remain slightly above Rs160 since the downward trend could bring the greenback at Rs158 till December,” said a senior banker.

Published in Dawn, November 4th, 2020