The Pakistani rupee continued its upward momentum on Monday, rising by Rs1.16 against the dollar in the interbank market.
The PKR closed at Rs227.29 per dollar, an appreciation of 0.51 per cent from Friday’s close of Rs228.45, according to the State Bank of Pakistan.
Head of Research at Tresmark, Komal Mansoor, said the rupee was appreciating on the back of a “flood of positives” since Ishaq Dar took over as finance minister.
Fuel and electricity prices had been reduced while inflation in September was measured at 23.18pc compared to expectations of 27pc, she noted. Flood relief to the tune of $2-3 billion was expected to flow in the short to medium term and the parity was being managed by verbal intervention, she added.
“We may not have the reserves to throw in the market to bring the parity down but these tactics seem to be working for now. Whatever the yardstick used by the incoming finance minister, it should be made transparent and [implemented] after having all stakeholders on board,” Mansoor commented.
Meanwhile, Exchange Companies Association of Pakistan (Ecap) General Secretary Zafar Paracha said it was a welcome sign that the rupee was making gradual gains.
The government needed to see how the rupee’s upward trend could be maintained and anti-state elements and speculators prevented from benefiting, he said. Paracha appreciated Dar’s focus on the exchange rate, terming him a “ray of hope”.
“The reason for Dar’s fame is that he keeps a strict eye on the dollar’s [value], and has experience. I consider him to be the last hope. He too believes the dollar should not be more than Rs160-170. With the way the rupee is gaining slowly, it appears the dollar will come down to Rs200 soon.”
Paracha called on the government to resist any pressure that exporters exert amid the rupee’s appreciation. “Exports are expected to go down in view of the global recession. Currencies are very weak in front of the dollar. Even if the quantum of our exports to Europe remains the same, when the proceeds are converted to dollars, there will be a major drop.
“Orders might be reduced. The government should not give in to the pressure. Exporters’ performance in the last few decades has not improved. We are an import-dependent country [and] if we keep increasing dollar rates for exporters, our country will not be able to progress,” he added.
The Ecap general secretary advised the government to focus on increasing the amount of dollars brought into the country through alternate means such as incentivising overseas Pakistanis and exchange companies (ECs) and prioritising the information technology sector.
He also advised the government to revisit trade and immigration policies with Afghanistan and Iran, and relax strict rules imposed on ECs.
The PKR had fallen close to an all-time low of Rs239.94 on Sept 22. It has been on an uptrend since then, with its value improving by Rs11.26 or 4.7pc in the last six sessions.
Last week, Finance Minister Dar predicted the rupee was going to further strengthen in the coming days.
“Appreciation of the US dollar against Pak rupee is the mother of all evils. Its appreciation against the rupee is artificial and I am telling you that the actual value of the rupee has been manipulated,” the minister said during a press conference on Saturday.
He said since he had taken over the charge of the finance ministry the rupee had appreciated and would further go upward against the US dollar. “I warn those involved in artificial appreciation of dollar against rupee, as strict action will be taken against them,” he added.