After weakening in the early part of the day, the Pakistani rupee closed slightly stronger against the US dollar in the open market on Tuesday.
Currency dealers Business Recorder reached out to said the rupee was quoted at 300 for selling and 297 for buying purposes for customers in the open market, lower by Rs3 as compared to rates on Monday.
However, at the end of trading, the rupee was quoted at 296 for selling and 293 for buying purposes, according to data provided by the Exchange Companies Association of Pakistan (ECAP).
Rates in the inter-bank and open markets are now firmly close to each other, reducing the premium that is one of the structural benchmarks of the International Monetary Fund (IMF) programme. In the inter-bank market, the rupee closed at 294.9 against the US dollar on Tuesday.
The government was asked that the average premium between the inter-bank and open market rate will be no more than 1.25% during any consecutive 5 business day period.
The rupee has regained momentum in recent weeks, owing to a countrywide crackdown by law enforcement agencies against illegal exchanges and smugglers of currencies.
Apart from the government’s administrative measures, the State Bank of Pakistan (SBP) also announced structural reforms, directing commercial banks to establish their own ECs as fully-owned subsidiaries. So far, three banks have announced establishing the ECs.
“Going forward, in the short run, besides these administrative steps, completion of IMF review due in November 2023 will be an important driver of local currency,” said Topline Securities in a report recently.
“Moreover, global oil prices, USD inflows from multilateral agencies like World Bank and Asian Development Banks, timely rollover of maturing loan and expected Foreign Direct Investment (FDI) in few sectors will be the other factors determining the value of PKR,” added the brokerage house.