- Appreciates another 0.09% to close below 176 level in inter-bank market on Monday
Pakistan's rupee continued to strengthen against the US dollar, appreciating 0.09% in the inter-bank market on Monday to close below the 176 level for the first time since December 1 last year.
As per the State Bank of Pakistan (SBP), the rupee closed at 175.92 after a day-on-day appreciation of 15 paisas or 0.09%. The appreciation comes after the rupee registered gains in three of the five sessions during the previous week as well.
The rupee has recovered 1.32% after touching its all-time low of Rs178.24 on Dec 29, 2021.
“The import figures for the month of January are expected to be lower than anticipated,” Samiullah Tariq, Head of Research and Development at Pakistan Kuwait Investment Company Limited, told Business Recorder. “This has led to a drop in demand for the dollar."
Tariq said that amid mini-budget concerns traders imported a lot of goods early on, “leading to excess import”.
"Therefore, the upcoming import bill is expected to be below $6 billion."
The rupee's appreciation also comes as the National Assembly passed the Finance (Supplementary) Bill, 2021 as well as the State Bank of Pakistan (Amendment) Bill, 2021, meeting key conditions ahead of the International Monetary Fund (IMF) board meeting on Pakistan’s sixth review of the Extended Fund Facility (EFF).
“Unlike the mini-budget, the SBP (Amendment) Bill needs to be passed by the Senate as well, so there is (some) uncertainty regarding it in the market,” said Tariq.
The IMF programme, many believe, is crucial to provide stability to the currency market that has seen the rupee lose its value, and endure volatility in the face of a rising import bill.
Tariq was of the view that the rupee could appreciate further against the US dollar during the ongoing month.
Talking about the latest appreciation of Pakistan’s Real Effective Exchange Rate (REER), Tariq said that despite the increase in REER value, Pakistan's exports remain competitive.
The country’s REER increased to 98.5 in November 2021 compared to 96.4 recorded in October 2021.
“As per REER, rupee should be in the range pf 172-173 against the US dollar, suggesting further room for improvement,” he added.
Inter-bank market rates for dollar on Monday
BID Rs 175.80
OFFER Rs 175.90
In the open market, the PKR remained unchanged for both buying and selling against USD, closing at 177 and 178, respectively.
Against Euro, the PKR remained unchanged for both buying and selling, closing at 201.50 and 203.50, respectively.
Against UAE Dirham, the PKR lost 10 paisas for both buying and selling, closing at 48.52 and 49, respectively.
Against Saudi Riyal, the PKR gained 10 paisas for both buying and selling, closing at 46.40 and 46.85, respectively.
Open-market rates for dollar on Monday
BID Rs 177
OFFER Rs 178