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KARACHI:
Backed by a host of supportive developments, Pakistani currency on Friday recovered further and stood below Rs292 against the US dollar for the first time in over five weeks in the inter-bank market.
It signals that imports-fuelled inflation and petroleum product prices may come down in the coming week and months.
According to the State Bank of Pakistan’s (SBP) data, the rupee further gained 0.35%, or Rs1.02, and stood at Rs291.76 against the greenback, maintaining its winning streak for the 13th consecutive working day.
In the open market too, the currency regained 0.85%, or Rs2.50, to Rs293.50/$, according to the Exchange Companies Association of Pakistan (ECAP).
The latest recovery came after the interim government projected the fair rupee value at Rs260/$, indicating that there was a big room for further strengthening of the currency.
In the past two weeks, the currency has cumulatively recovered 5.25%, or Rs15.34, compared to the all-time low of Rs307.10/$ hit on September 5 in the inter-bank market.
The currency also got support from an increase of $56 million in the country’s foreign exchange reserves that reached $7.69 billion in the week ended September 15, 2023. The reserves rose after seven consecutive weeks of downtrend.
The central bank has said in a podcast that the uptick in foreign inflows is expected to help contain inflation in the country.
Market talk suggests that the rupee’s appreciation has sparked hopes for a reduction of Rs10-12 per litre in petroleum product prices.
On the contrary, the international oil market may see a price hike after Russia banned the export of diesel and co-products to stabilise prices in its local market ahead of winter. It may dim chances of a downward revision in prices in Pakistan’s market.
The difference between currency exchange rates in the inter-bank and open markets stood at 0.60%, or Rs1.74, which was well below the IMF’s recommended level of a maximum of 1.25% in any of the five consecutive working days.
The currency recovery and the reduced spread came on the back of increase in foreign currency inflows through official channels following the launch of a crackdown by the government on currency smugglers and hoarders.
Gold price
The All Pakistan Saraf Gems and Jewellers Association has said that it will resume the announcement of the precious metal prices from Monday.
Daily prices had not been released for about a week since the law enforcement agencies caught some gold businessmen for their alleged involvement in the commodity’s smuggling. Later, they were released.
Published in The Express Tribune, September 23rd, 2023.
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