The rupee jumped by another Rs2.13 against the dollar in the interbank market on Wednesday — an uptrend that has continued for nearly two weeks.
According to the State Bank of Pakistan (SBP), the local currency closed at Rs221.91 against the greenback, up 0.96 per cent.
General Secretary of Exchange Companies Association of Pakistan (Ecap), Zafar Paracha, said sentiments had changed in the interbank market because of which the rupee was gaining.
“There are many sellers and few buyers. In the interbank market, supply exists but demand does not,” he said.
Paracha elaborated that exporters, who had previously stopped depositing their payments, had started selling dollars while importers were waiting for the exchange rate to stabilise before buying the greenback.
“Even though we have not yet received money from the IMF (International Monetary Fund), we have fulfilled its conditions. The IMF has said it will give us the money by the end of the month. Friendly countries have also said they will give money, whether as a loan or an investment.”
He also referred to the United Arab Emirates’ plans to invest $1 billion in various Pakistani companies, stating that all these factors were playing a positive role.
In addition, the market expected the political situation to improve, the currency dealer said. That, combined with the government’s statement that it had the money to make all the payments this year coupled with a drop in imports, showed that the pressure on the rupee would ease and it may even appreciate to Rs200 against the dollar, Paracha added.
Mettis Global Director Saad bin Naseer said import compression and expected bilateral and multilateral inflows had strengthened the rupee’s value against the dollar in the last few sessions.
“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.
Head of Research at Tresmark Komal Mansoor said, “Sentiments have taken a U-turn on positive news flow. The fair value [of the rupee] on the REER index is 205 but given the vulnerabilities on the external front and inflation trajectory, we expect the market to gravitate towards 222-225 levels.”
After two weeks of battering against the dollar, the rupee fell to its lowest level against the greenback on July 28, closing at Rs239.94. However, this trend has reversed since then, with the local currency rising by Rs15.09, or 6.62pc, till Aug 5.
The biggest hike was seen on Aug 3, when the rupee appreciated by a record Rs9.59.