- Currency has strengthened over 8% since hitting its all-time low in inter-bank market last month
The Pakistani rupee continued to march upwards against the US dollar amid improved sentiment, closing at 221.91 in the inter-bank market on Wednesday.
As per the State Bank of Pakistan (SBP), the rupee settled at 221.91 after appreciating 0.96% or Rs2.13 against the greenback.
Wednesday's increase was the seventh successive gain for the currency that hit its all-time low of 239.94 against the US dollar last month. It has since appreciated over 8%.
During the previous week, the rupee registered a substantial gain of 6.8% to close at 224.04 in the inter-bank.
The rupee closed stronger throughout the week, maintaining its momentum as Pakistan reported a narrower trade deficit and much lower import bill during July, taking pressure off the currency that had taken a hammering at the hands of the dollar recently.
The improvement in market sentiment was driven after the International Monetary Fund (IMF) said that with the increase in petroleum development levy (PDL), Pakistan has completed the last prior action for the combined seventh and eighth review, adding that the board meeting is tentatively planned for late August once adequate financing assurances are confirmed.
Later, in an official statement, an official source in Abu Dhabi emphasised the UAE’s intention to invest $1 billion in Pakistani companies in various economic and investment sectors, taking Pakistan closer to meeting what the IMF calls a funding gap.
Market analysts expect further appreciation in the coming days, provided Pakistan gets its funding needs in order.
“Falling imports and likely resumption of IMF and other flows will bring the much-needed stability in Pak Rupee,” said Topline Securities in its ‘Pakistan Market Outlook - Mid Year Strategy 2022’.
“We now expect PKR to remain in the range of Rs 200-240 in FY23 where on average basis we expect PKR to settle at around Rs220 in FY23 against average USD rate of Rs178 in FY22,” it said.
Meanwhile, another analyst said the rupee is moving towards equilibrium.
“The announcement from the IMF, and import-curtailment measures are driving this appreciation,” Tahir Abbas, Head of Research at Arif Habib Limited (AHL), told Business Recorder.
“The rupee is moving towards its equilibrium. It could appreciate to 200-205 during August as imports are expected to slow down in coming months."
Inter-bank market rates for dollar on Wednesday
BID Rs 221.50
OFFER Rs 222.50
In the open market, the PKR gained 4 rupees for both buying and selling against USD, closing at 216 and 218, respectively.
Against Euro, the PKR gained 3 rupees for both buying and selling, closing at 221 and 223 respectively.
Against UAE Dirham, the PKR gained 1.60 rupees for buying and 1.50 rupees for selling, closing at 58.70 and 59.30, respectively.
Against Saudi Riyal, the PKR gained 60 paisas for both buying and selling, closing at 57.50 and 58, respectively.
Open-market rates for dollar on Wednesday
BID Rs 216
OFFER Rs 218