KARACHI
Pakistani rupee extended gains against the US dollar for the third consecutive week and appreciated by 1.71 percent in the interbank market and 1.68 percent in the open market.
According to details, the rupee opened at 296.85 against the greenback in the interbank market on Monday last and closed at 291.76 on Friday, going up by Rs5.09 (+1.71 percent). In the preceding two weeks, the rupee surged by 2.01 percent and 0.82 percent against the US dollar. However, the rupee has depreciated by Rs5.77 during the current fiscal year 2023-24, and Rs64.34 in the current year.
Similarly, the local unit closed the week in the range of 292-295 against the dollar in the open market on Friday after opening the week at 297-300 on Monday, rising by Rs5 (+1.68 percent).
The rupee appreciated by Rs36 (+8.68 percent) in the open market in the previous three weeks.
The local currency has significantly gained in the past three 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 workers’ remittances dropped by 23.74 percent on a year-on-year basis to $2.09 billion in August. In an effort to promote remittances through legal channels, the central bank announced monetary incentives for banks, and these actions contributed to support the rupee’s sentiment. Pakistan is also expecting remittances to clock in at around $2.5 billion primarily due to a crackdown on the grey market and additional incentives to emitters.
Meanwhile, foreign exchange reserves held by the SBP increased by $56 million on a weekly basis, clocking in at $7.7 billion as of September 15. Total liquid foreign reserves held by the country stood at $13.19 billion. Net foreign reserves held by commercial banks stood at $5.49 billion. However, the central bank reserves had been under pressure due to debt repayments, rise in import payments after ease in restrictions, and lack of fresh inflows.
