Pakistani Rupee Surges to 3-Month High Against US Dollar
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In an impressive streak of performance, the Pakistani currency has reached its highest value in nearly three months, just shy of Rs286 against the US dollar in the interbank market on Tuesday. This sustained upward trend is attributable to a consistent 19-day winning streak, driven by an improved influx of foreign currency into the domestic economy.
According to data from the State Bank of Pakistan (SBP), the rupee has registered daily gains of 0.36%, equivalent to Rs1.04, culminating in a closing rate of Rs285.72 against the US dollar for the day. This level had last been observed on July 20, 2023, as reported by the central bank.
In total, the Pakistani currency has fortified itself by an impressive 7.48%, or Rs21.38, over the past 19 working days, when compared to its record low of Rs307.10/$ on September 5, 2023.
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Market experts propose that the rupee could have potentially rebounded even further, possibly reaching a range of Rs250-260/$, if the central bank had not intervened by purchasing excess foreign currency supplies from the market. This suggests that there may still be significant room for future gains.
The central bank typically intervenes in the market by providing foreign currency supplies when it deems necessary, absorbing surplus supplies to maintain higher foreign exchange reserves for the country.
Reports indicate that law enforcement agencies have collected data on individuals hoarding foreign currencies amounting to $50 million at home, and they may take action to recover these currencies. This development has encouraged many individuals to sell their holdings, resulting in an increase in supplies.
In the open market, currency dealers are receiving substantial supplies from individuals, but there is a shortage of buyers at their retail counters. As a result, they have been selling supplies amounting to $40-50 million in the interbank market every week. Meanwhile, recent trade data shows a 4% improvement in exports and a 13% decrease in imports in September compared to August. This has led to an increase in the supply of foreign currencies in the local markets.
