The Pakistani rupee recovered strongly against the dollar in the interbank market on Monday, gaining Rs2.63.

The PKR closed at Rs237.02 per dollar, according to the State Bank of Pakistan (SBP). This equates to an appreciation of 1.11 per cent from Friday’s close of Rs239.65.

Saad bin Naseer, director of financial data and analytics portal Mettis Global, said the rupee’s recovery was a “sentimental reaction” to news that PML-N leader Ishaq Dar was returning to Pakistan to take over as finance minister.

“Dar was infamous for keeping exchange rate parity managed during the last time he was serving as the country’s finance minister. However, the recovery may be short-lived as the dollar continues to strengthen in the international markets and Pakistan’s funding needs remain unmet.”

Meanwhile, Forex Association of Pakistan (FAP) Chairman Malik Bostan said the primary reason for the PKR’s gains was a decline in international crude oil prices which had led to expectations of a dip in the import bill, and consequently, the trade deficit.

He said the news of Dar’s return also helped strengthen the rupee. “Dar kept the dollar’s rate fixed at Rs90 for a long time in the past … I expect speculation in the interbank market will be stopped [once Dar becomes the minister] which will improve the rupee’s value.”

He noted that the FAP had worked alongside Dar to improve the rupee’s value against the dollar in the past, adding that the association could collaborate with him to form a policy to “rapidly bring down the dollar rates”.

Bostan said he also expected Dar to accept the association’s demands regarding the currency declaration regime for travellers which would increase the greenback’s supply in the market.

“International financial institutions are helping Pakistan to deal with the floods. The International Monetary Fund has also indicated that it will ease conditions [of the programme]. This will have positive effects on the rupee.”

Prime Minister Shehbaz Sha­rif will return to Pakistan today, accompani­ed by Dar who is set to take charge as finance minister.

On Sunday, senior party leaders met Miftah Ismail, who handed in his resignation. A statement released after the meeting confirmed that Nawaz Sharif and PM Shehbaz had nominated Dar as the finance minister.

Ismail’s departure comes after months of speculation that Nawaz Sharif and Dar had been unhappy with some of his key decisions, specifically with regard to the fuel price hike.

The rupee had managed to stage a modest recovery — gaining six paise — against the US dollar on Friday after suffering losses in the previous 15 consecutive sessions.

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

The price of chocolate

The price of chocolate

Little attention is paid to any long-term strategy which might prevent vulnerable children from working in homes where they are in danger.

Editorial

Cholistan project
Updated 18 Feb, 2025

Cholistan project

GPI goals align with Pakistan's broader economic aims but the manner in which the initiative was launched raises questions.
Right to know
18 Feb, 2025

Right to know

IT is an unfortunate paradox that while on paper Pakistan has some of the most impressive right to information laws,...
Dam dispute
18 Feb, 2025

Dam dispute

THE situation in Chilas needs attention and a fair-minded approach so that it can be resolved amicably. Diamer ...
Climate funding gap
Updated 17 Feb, 2025

Climate funding gap

Pakistan must boost its institutional capacity to develop bankable climate projects.
UN monitoring report
Updated 17 Feb, 2025

UN monitoring report

Pakistan must press Kabul diplomatically over its tolerance of TTP terrorism.
Tax policy reform
17 Feb, 2025

Tax policy reform

THE cabinet’s decision to create a Tax Policy Office at the finance ministry has raised hopes that tax policy is...