The Pakistani rupee extended its gains by Rs3.11 against the dollar in the interbank market on Tuesday.
The local currency closed at Rs233.91 per dollar — an appreciation of 1.33 per cent from yesterday’s close of Rs237.02, according to the State Bank of Pakistan.
Head of Research at Tresmark, Komal Mansoor, said the exchange rate had been “left at the whims of sentiments”.
“The ‘Dar-jolt’ has strengthened the rupee but the underlying fundamental weakness remains. Larger economies are waging a reverse currency war with the intention to strengthen their currency against a strong king dollar.
“Japan intervened to strengthen the yen for the first time in 24 years, India has spent roughly $90bn in supporting its already stable currency. While the SBP has limited luxury in throwing dollars in the market, it is using subtle interventions to tame the market but it is time to be more vocal and assertive with creditors and lenders,” she stressed.
Dawn reported earlier that a number of currency dealers were happy at Dar taking over as new finance minister, expressing hopes that he would bring down the dollar rates as he did in the past.
During Dar’s previous stint as the finance minister, the rupee-dollar parity was held at around 100.
But analysts and exporters said Dar would not be able to bring down the dollar this time because of two reasons: the International Monetary Fund (IMF) will not allow maintaining an artificial exchange rate while an appreciation of the rupee in the current situation would badly damage exports.
Exchange Companies Association of Pakistan (Ecap) General Secretary Zafar Paracha said assurances of funds from the World Bank and Asian Development Bank among other international lenders after the floods, as well as, a reduction in global oil prices had led to expectations of a lower import bill, which helped the rupee recover.
The State Bank of Pakistan’s strict action against those involved in speculations also led to a rise in the rupee’s value in the interbank market, he added.
The market expected that friendly countries, who had promised to give $4 billion after the IMF’s deposit was received, would also provide the amount, Paracha said, adding that this could improve the PKR’s value to less than Rs230 per dollar.
“There is an expectation that the rupee will stabilise after Ishaq Dar becomes finance minister and he will come up with a mechanism to prevent daily fluctuations in the dollar’s rate,” the currency dealer said.
The rupee had snapped the dollar’s 15-session rally on Friday making a modest gain of six paise. In the opening session this week, the PKR recovered significantly by Rs2.63 or 1.11pc.