PKR gains further against USD, closes near 283 in interbank

Published October 5, 2023
An employee of a foreign exchange shop counts US dollar banknotes from behind a glass booth in Karachi, on September 7. — Reuters
An employee of a foreign exchange shop counts US dollar banknotes from behind a glass booth in Karachi, on September 7. — Reuters

The rupee extended its gains for the 21st consecutive session on Thursday, appreciating by a further Rs1.06 against the US dollar in the interbank market.

According to the Forex Association of Pakistan, the greenback was changing hands for Rs283.50 at 9:44am in the interbank market, which is buoyed by the recent crackdown on the informal currency market.

By the closing time, the dollar stood at Rs283.62, depreciating 0.37 per cent, the State Bank of Pakistan said.

Meanwhile, the benchmark KSE-100 index continued its momentum of trading in the green, gaining 372.55 points, or 0.79 per cent, closing at 47,452.38 from the previous 47,079.83 points.

Experts have questioned the sustainability of the rupee’s rally, and had earlier projected that it would not make it below the 285 mark due to dwindling foreign exchange reserves amid low inflows and weak economic fundamentals.

In an Op-Ed for Dawn published today, journalist Khurram Hussain wrote that pulling through the current economic crisis would take “more than a crackdown and certainly more than a bailout or even two”.

Speaking to Dawn.com, Tahir Abbas, the director of research at Arif Habib Limited, noted a recent report regarding the rupee’s performance and said it was the best-performing currency for the month of September.

“This is primarily due to the crackdown against illegitimate demand, which includes illegal money exchanges and hundi-hawala,” he said. “This [crackdown] was long due. This should have been done way earlier,” he added.

Abbas said that for the medium-term, the country needed to focus on managing multilateral and bilateral inflows as well as the International Monetary Fund (IMF) programme.

He said that the current crackdown should remain “ongoing”. “And mid to long-term, we need to focus on increasing exports as well as remittances and foreign direct investment,” he said.

Zafar Paracha, secretary general of the Exchange Companies Association of Pakistan, lauded the authorities’ crackdown against smuggling. He noted that restrictions on Afghan transit trade had also shown positive results.

He said that measures were being taken against those crossing the border illegally from Afghanistan. He said that the PKR has gone up by 25 against the greenback, adding that the rally was “gradual and sustainable”.

“In the coming days, we will see the dollar go down to Rs250,” he said. Paracha said that the industry would strengthen after the crackdown and the gross domestic product would also get better.

“The drive by the government is making things better. In my opinion, the focus should not be on elections. Strengthening the conditions of the country should be our first priority,” he said.

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