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Open-market: rupee continues to make giant strides against US dollar due to sentiment

  • Local currency appreciates to 318 during trading, gap with inter-bank market narrows further
Published September 6, 2023

The Pakistani rupee continued to strengthen against the US dollar in the open-market, and was selling at 318 during trading on Wednesday, as gap with the inter-bank rate narrowed further.

Dealers Business Recorder reached out to said the rupee was being quoted at 318 for selling and 315 for buying purposes for customers in the open-market, down Rs7 from Tuesday’s levels of 325 and 322.

The Exchange Companies Association of Pakistan (ECAP) also quoted rates at Rs313 and Rs316 during trading.

However, at the end of trading, the rupee settled at 323 and 320 for selling and buying, respectively, in the open market.

In the inter-bank market, the rupee appreciated marginally against the US dollar.

“Market noise suggests the currency may fall below 300 level in the open-market, and the inter-bank would follow soon,” said a dealer.

Market experts attributed the halt in currency’s fall in the open market to Chief of Army Staff (COAS) Asim Munir’s 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.

“The appreciation is being driven by the COAS meeting, under which issues pertaining to US dollar smuggling were discussed,” Fahad Rauf, Head of Research at Ismail Iqbal Securities Limited, told Business Recorder.

“Customers who have been holding dollars are now selling it in the open-market. However, the real issue is improvement in dollar inflows, which is a long-term solution.

“Administrative measures can control exchange rate in the open market, but controlling it in the inter-bank would require dollar inflows,” he added.

Additionally, personnel of law enforcement agencies were also deployed at exchange companies for monitoring of dollar trading on Tuesday.

Being under an International Monetary Fund (IMF) programme, the exchange rate gap between the inter-bank and open markets – called the premium by the IMF in its country report on Pakistan published after the Stand-By Arrangement’s approval by the Executive Board – needs to be around 1.25%.

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 renewed pressure on the rupee.


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Zubair Hameed Sep 06, 2023 01:08pm
Its just another step back before the giant leap.. A calm before the storm. You cannot control the exchange rate by sentiments for too long. Supply and demand is the key to stabilize the rupee value.
thumb_up Recommended (0) reply Reply
faisal Sep 06, 2023 01:16pm
bye bye imf welcome oil money.
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Observer Sep 06, 2023 01:24pm
Intriguing to see that till couple of days back the 334 rate was being attributed to demand and supply.. and all of a sudden, there's abundant supply of dollars and no demand, bringing the rate down?? so convenient ....
thumb_up Recommended (0) reply Reply
Abdullah Sep 06, 2023 01:49pm
@Zubair Hameed , Its not sentiments.Its the people and exchange houses making money on it are being forced to stop doing it and hence you see the result.
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Builder Sep 06, 2023 02:08pm
@Zubair Hameed open market is not supply and demand - it's speculative trading, hoarding and smuggling. I believe upcoming cancellation of 5000 currency note can further fix things.
thumb_up Recommended (0) reply Reply
Saeed Iqbal Sep 06, 2023 02:27pm
@Builder, upcoming do you mean the note is being cancelled
thumb_up Recommended (0) reply Reply
Builder Sep 06, 2023 02:56pm
@Saeed Iqbal, yes, it's under consideration and will be a huge blow to black market.
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Adnan Aziz Sep 06, 2023 03:28pm
Did the people in plain clothes posted in currency exchanges bring about this change by harassing the money changers and the public at gun point?
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Love Your Country Sep 06, 2023 03:55pm
@Adnan Aziz, ..... they are queuing up to be posted there ..
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Fazeel Siddiqui (Overseas Pakistani) Sep 06, 2023 04:54pm
@Zubair Hameed, Short term approach of every short term post regardless political or apolitical, result short term gains and ......... repeat. 76 years story.
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Muhammad Shabbir Sep 06, 2023 08:02pm
@Builder, I don't think it would happen because most of our ruling elite is the beneficiary.
thumb_up Recommended (0) reply Reply
Kashif Sep 07, 2023 02:40pm
Pakistanis never fall into this kind of fraud, total fraud, keep your money in the bank
thumb_up Recommended (0) reply Reply

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