KARACHI
Pakistani rupee snapped a two-day losing streak against the US dollar in the inter-bank market on Thursday with a gain of Rs1.48.
The State Bank of Pakistan (SBP) said in a tweet that the rupee opened at 280.29 against the dollar in the interbank market and closed at 278.81, showing an appreciation of 0.53 percent. The local currency surged more than 6 percent in the past month to become the top performer in the world. The rupee has appreciated by Rs7.18 during the current fiscal year 2023-24, while it has depreciated by Rs49.39 in the current year.
Similarly, the Pakistani rupee recovered Re1 against the greenback in the open market. The rupee was quoted in the range of 279-282 a dollar as compared to 280-283 in the previous session. The rupee has recovered by Rs50 against the dollar in the last 32 sessions in the open market.
The Pakistani rupee has rebounded from an all-time low to become the world’s top performing currency — and there’s still room to strengthen, analysts said. The currency plummeted to a record low of Rs307 rupees against the greenback in early September. It has since gained around 7 percent against the dollar, marking the strongest bounce among other currencies and outpacing them to become the best performer last month. This was largely owed to a government clampdown on a widespread illicit dollar trade.
“Pakistan’s rupee was the top performer globally this month as a government crackdown on the illegal dollar trade helped reverse its fortunes,” HDFC securities said in a recent report. “A remarkable feat as most currencies including the Thai baht and South Korean won tumbled against the dollar on speculation the US interest-rates will stay elevated for longer,” the report added.
The market experts said the government’s crackdown in the open market against currency speculators and hoarders helped rupee’s recovery. However, the room for further improvement is narrowing as the Real Effective Exchange Rate (REER) is nearing 100.
They further said that the currency remains fundamentally vulnerable, as the country has yet to see a significant increase in exports and remittances, while imports remain high.
The reports of increased vigilance of the Afghan transit trade also contributed to the rupee’s rise. The Ministry of Commerce recently took a decisive step by imposing a ban on 212 items that were previously being imported into Afghanistan via Pakistan under the Afghan transit trade agreement. Additionally, the FBR has imposed a 10% processing fee on five major categories of Afghan transit commercial goods imported into Afghanistan through Pakistan.
