Pakistani rupee maintained its winning streak against the US dollar in the interbank market for the ninth straight session and appreciated by Re0.90 on Monday.
The State Bank of Pakistan (SBP) said in a tweet that the rupee opened at 296.85 against the dollar in the interbank market and closed at 295.95, showing an appreciation of 0.3 percent. The rupee appreciated against the US dollar in the interbank market by Rs8.62 during the last two weeks, while it has depreciated by Rs9.96 during the current fiscal year 2023-24, and Rs68.53 in the current year.
Meanwhile, the rupee gained 50 paisas in the open market and was quoted in the range of 295.50-300 a dollar against 296-300 a session earlier. The rupee has appreciated by Rs31.5 in the last 10 sessions while it appreciated by Rs5 last week.
The local currency has significantly gained in the past two weeks, with analysts attributing the rise to an ongoing crackdown on illegal dollar outflows. Currency dealers in the interbank said exporters have been selling dollars on a large scale, fearing further devaluation. Moreover, reports of increased vigilance of the Afghan transit trade also contributed to the rupee’s rise, they added.
On the other hand, the SBP has also stepped up supervision of the foreign exchange market, ordering banks to set up separate entities to conduct forex transactions and extending a clampdown on hard-currency hoarders and smugglers. The central bank has also decided to introduce structural reforms in the exchange companies’ sector to provide “better services to the general public and bring transparency and competitiveness”.
The government has been steadfast in its commitment to stabilizing the exchange rate and bringing it back to normal levels. Recent actions against smuggling and hoarding of foreign currency have led to a significant decrease in the value of the US dollar in both the open and interbank markets.
The State Bank’s actions underscore its determination to maintain strict regulatory oversight and ensure compliance with foreign exchange regulations to protect the integrity of Pakistan’s financial system. These measures are part of a broader strategy to combat illegal financial activities, promote transparency, and safeguard the country’s economic stability. The SBP will continue to monitor and enforce compliance within the financial sector to uphold the integrity of Pakistan’s currency and financial markets.
Meanwhile, foreign exchange reserves held by the central bank fell by $140 million to $7.638 billion in the week ending September 8, the SBP said on Thursday. The total reserves of the country dropped by $48 million to $13.079 billion. However, the reserves of commercial banks increased by $93 million to $5.440 billion. The forex reserves are enough to cover 1.70 months of import payments. The SBP attributed the decline in the forex reserves to the external debt repayment.