The Pakistani rupee maintained its upward trajectory against the US dollar in the open market on Thursday as gap with the inter-bank rate narrowed further.
Dealers Business Recorder reached out to said the rupee was being quoted at 312 for selling and 309 for buying purposes for customers in the open market, down from Wednesday’s levels.
At the end of trading on Thursday, the Exchange Companies Association of Pakistan (ECAP) quoted rates at 307 for selling and 304 for buying purposes in the open market.
In the inter-bank market, the rupee also appreciated against the US dollar, and settled at 304.94.
“Market expects rates may fall further amid the State Bank of Pakistan’s (SBP) latest measures,” said a dealer.
On Wednesday, the central bank decided to introduce structural reforms in the Exchange Companies’ (ECs) sector.
“As part of these reforms, leading banks actively engaged in foreign exchange business will establish wholly-owned Exchange Companies (EC) to cater to the legitimate foreign exchange needs of general public,” said the SBP in a statement.
The central bank also announced to consolidate and transform various types of existing Exchange Companies and their franchisees into a single category of Exchange Companies with a well-defined mandate.
In addition, the SBP also raised the minimum capital requirement for EC from Rs200 million to Rs500 million, raising the barrier to entry for the private sector.
The development comes days after the Chief of Army Staff (COAS) Asim Munir’s meetup with the business community.
During the meeting, the army chief discussed the government’s economic plans and intentions to quell smuggling and speculative activity.
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.