KARACHI — The Pakistani rupee has shown resiliency despite recent setbacks, rising fast to a figure just below Rs279 against the US dollar on Thursday in the inter-bank market. This good development can be attributed to “authorities concerned” reassuring the market that there is no abnormal demand for foreign money.
The latest figures from the State Bank of Pakistan (SBP) show that the value of the rupee rose by 0.53%, or Rs1.48, to end the day at Rs278.81 in relation to the US dollar.
The currency had fallen sharply the day before, falling by 1.16%, or Rs3.26, to a one-week low of Rs280.29 per US dollar. Reports of increased demand for dollars from importers and for interest payments to global investors with investments in Pakistani Eurobonds and Sukuk on international markets were the primary factors contributing to the decline.
Exchange Companies Association of Pakistan (ECAP) General Secretary Zafar Paracha blamed banks for the precipitous decline, saying that the financial institutions had once again attempted to manipulate the rupee-dollar parity by betting on rising demand for the greenback from importers and the government to cover interest payments.
Authorities who had lately cracked down on foreign currency smugglers and hoarders responded to these worries by confirming that there was no unusually high demand for the dollar. The result, as pointed out by Paracha, was a modest rebound for the rupee from its previous losses.
His upbeat tone suggested that the rupee’s recent upward trend — which had been halted at around Rs277 on Tuesday — would continue. Paracha went so far as to say that, given the current upward trend, it is possible for the rupee to regain strength and reach Rs260 against the US dollar.
The US dollar’s value versus the rupee rose to a three-month high of Rs276.83 in the weeks leading up to this, a cumulative increase of 11%. The significant crackdown on illegal FX activity led directly to this improvement.
On Thursday, the open market saw a daily gain of Rs1 for the rupee versus the US dollar, as reported by ECAP.
Paracha observed that the availability of foreign currency has increased, with the inter-bank market selling $500 million in a single month for the first time in seven or eight months.
Remittances sent home by workers and higher export profits have both increased the availability of money on the market.
Statistics on international trade show that the deficit is still manageable, and that large-scale manufacturing is doing well. Paracha said that the stronger economic fundamentals are helping to support the Pakistani rupee.
