On Monday, to close the session the Dollar falls to Rs158.91, the rupee strengthened another 18 paisas on the interbank market, as seen by exchange rates issued by the State Bank of Pakistan ( SBP).
“Robust traction in exports and remittances and decent flows from Roshan Digital Accounts are the main reasons for the appreciation,” said Saad Ali of Intermarket Securities. The implementation of a market-determined exchange rate has supported the rupee-dollar parity, he observed.
The rupee is currently at a six-and-a-half-month high, rising against the greenback by Rs9.52 or 5.6 percent after reaching an all-time low of Rs168.43 on 26 August.
Dollar falls to Rs158.91
Meanwhile, on Monday, on the free market, the dollar dropped 50 paisas to trade at Rs158.80. Since hitting a high of Rs169, the dollar on the free market has dropped as much as Rs10.2. Dollar falls to Rs158.91 and rupee strengthened
“I think the currency’s appreciation toward the US dollar [has] shocked many. The current account surplus and inflows from overseas Pakistanis through Roshan Digital may have been powered by it,’ commented Ali Farid Khawaja, Chairman of KASB Securities.
Khawaja, however, said that this method of appreciating the rupee was neither viable nor advisable. “The government needs to boost exports and has set a $37 billion export target, and we know that a stronger PKR is harming exports.”
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“I assume the fluctuation in the exchange rate represents the timing of the flows. It will depreciate as the loan repayments due later in the fiscal year will need to be rendered by the government. The positive news is that the exchange rate action illustrates that it is not managed and can travel in any direction depending on the situation of demand and supply, ”he said.
Khaw aja said, expressing his outlook on the exchange rate, “The current account surplus and movement of the exchange rate indicates that it has now been brought under regulation.” How the International Monetary Fund responds to it after we get back into the programme would be the true measure. Are they going to make currency deflation a precondition for the programme to be resumed? I hope maybe they will.
Asia’s third-best currency
The Pakistani rupee was the third best-performing currency in Asia, behind the Indonesian rupiah and the South Korean won, Bloomberg data shows. Since October 1, the Pakistani currency has appreciated by 3.1pc, while the Indonesian rupiah strengthened by 4.51pc, and the South Korean won by 3.6pc during the month, first on the list. Dollar falls to Rs158.91.
Since its peak this year in March 2020, the US dollar index is down around 10pc. This has contributed to the strengthening of the rupee against the dollar, along with Pakistan’s current account surplus on the basis of higher remittances. The REER [Real Effective Exchange Rate] of Pakistan is also at a comfortable level of 94.1,” noted Syed Atif Zafar, Topline Securities’ chief economist.
Dollar falls to Rs158.91!