Pakistan's rupee continued its upward trajectory to record its fourth successive gain against the US dollar, appreciating 0.11% in the inter-bank market on Wednesday.
As per the State Bank of Pakistan (SBP), the rupee closed at 181.82 after a day-on-day appreciation of 20 paisas or 0.11%. On Friday last week, the local currency had recorded its biggest increase on a day-to-day basis in the inter-bank market in two years after it closed at 184.68.
In the last four trading sessions, the rupee has appreciated by 3.5%, a remarkable turnaround for a currency that had hit its record low last week.
Pakistan's currency has been under pressure for months now, and has gradually weakened from 152.28 in less than a year as a widening current account deficit, high import bill, and falling foreign exchange reserves hurt market sentiment.
Oil prices, also a key determinant of currency parity due to their contribution to Pakistan's import bill, also edged up on Wednesday after Moscow said peace talks with Ukraine had hit a dead end, fuelling supply worries, while weak economic data from China and Japan kept a lid on gains.
“The appreciation run is due to the settlement on the political front, alongside SBP's announcement that Pakistan engagement with the International Monetary Fund remains on track” Saad Hashmey, Executive Director BMA Capital, told Business Recorder.
Talking to Bloomberg TV earlier, SBP Governor Dr Reza Baqir had said that Pakistan’s engagement with the IMF "remains strong" in terms of both the finance ministry and the central bank.
Meanwhile, Hashmey was of the view that looking at the Real Effective Exchange Rate (REER), the rupee is expected to trade in the 175-180 bandwidth.
Hashmey said he was optimistic that the remittance figure is expected to be higher for the next two months due to Ramazan.
“The funds in Roshan Digital Accounts (RDAs) are also increasing, contrary to expectations,” said Hashmey, while adding that the rollover of the multi-billion-dollar Chinese loans needs to be looked upon, “which should ideally take place in a matter of days”.
The expert added that the latest measure of the central bank to impose a 100% cash margin on imported items will also work towards reducing the import bill, easing pressure on the rupee.
Inter-bank market rates for dollar on Wednesday
BID Rs 181.60
OFFER Rs 181.70
In the open market, the PKR gained 1.50 rupees for both buying and selling against USD, closing at 181 and 182, respectively.
Against Euro, the PKR gained 90 paisas for buying and one rupee for selling, closing at 194.20 and 196, respectively.
Against UAE Dirham, the PKR gained 30 paisas for both buying and selling, closing at 48.52 and 49, respectively.
Against Saudi Riyal, the PKR remained unchanged for both buying and selling, closing at 48.32 and 48.80, respectively.
Open-market rates for dollar on Wednesday
BID Rs 181
OFFER Rs 182