Open market: rupee sees strong recovery against US dollar

The Pakistani rupee made significant recovery against the US dollar in the open-market, and was selling at 325 during trading on Tuesday, as gap with the inter-bank rate narrowed.

Dealers Business Recorder reached out to said the rupee was being quoted at 325 for selling and 322 for buying purposes for customers in the open-market, down by Rs5 from Monday’s levels of 330 and 327.

The Exchange Companies Association of Pakistan (ECAP) also quoted rates at Rs325 and Rs322 during trading. At the end of the session, it said the rates were Rs323 and Rs320 for selling, and buying, respectively.

However, in the inter-bank market, the rupee remained under pressure and settled at a record low of 307.1 against the US dollar.

Dealers attributed the halt in currency’s fall in the open market to Chief of Army Staff (COAS) Asim Munir’s recent meetup with the business community on Sunday.

During the meeting, the army chief discussed the government’s economic plans and intentions to quell smuggling and speculative activity.

Meanwhile, analysts highlighted that supply demand forces are at play. “There are no buyers, only sellers in the market,” said an analyst.

A gap of less than 1.25% between rates in the inter-bank and open markets is one of the structural benchmarks set by the Washington-based lender for Pakistan.

However, despite the latest fall, the gap – called the premium by the IMF in its country report on Pakistan published after the Stand-By Arrangement’s approval by the Executive Board – remains higher than the prescribed level.

It is pertinent to mention that concerns over Pakistan’s rising imports as restrictions ease, a widening current account deficit, and falling foreign exchange reserves have renewed pressure on the rupee.