KARACHI: The US dollar appreciated by 21 paise to Rs279.57 against the rupee in the interbank market on Tuesday.

The exchange rate has been stable for over two months with support from the State Bank of Pakistan which restricted imports.

The market perception of the exchange rate is not as positive as it looks. Currency experts believe that the stable exchange rate is an outcome of a SBP’s strategy which provides little space for imports to go up.

However, the rate stability resulted in an improved inflow of export proceeds which kept the interbank market liquid. This also benefits the SBP as it buys dollars from the banks to keep its reserves at a certain level.

The SBP foreign exchange reserves stand slightly above $8bn. The Fitch Rating agency, however, expressed doubts over the growth of the economy and the exchange rate stability given political uncertainty due to the split mandate in the general elections.

Published in Dawn, February 21st, 2024