The Pakistani rupee made significant strides against the US dollar, as it appreciated 1.08% in the inter-bank market on Wednesday.
As per the State Bank of Pakistan (SBP), the currency closed at 273.33 against the US dollar, an increase of Rs2.95. The currency has depreciated by 24.74% during the ongoing fiscal year against the greenback.
Today’s development comes as the market is optimistic the IMF programme will resume soon, according to experts.
“Exporters are also selling their dollars into the market, as they believe that the rupee is fairly valued,” Samiullah Tariq, Head of Research at Pak Kuwait Investment Company Limited told Business Recorder.
He added that amid the free-float of the exchange rate, the inflows from illegal markets are diverting towards formal channels.
The rupee was under pressure against the US dollar on Tuesday, closing at 276.28 against the US dollar, a depreciation of Re0.98 or 0.35%.
Discussions between the government and the International Monetary Fund (IMF) regarding the unlocking of funds are underway.
But it appears the government will have to re-legislate to raise Petroleum Levy from Rs50 to Rs70 per litre in order to generate Rs855 billion in the remaining months (February-June) of the current year based on current fuel consumption, exchange rate and international oil prices, an official of Petroleum Division told Business Recorder on condition of strict anonymity.
Internationally, the dollar eased on Wednesday after US Federal Reserve Chair Jerome Powell failed to offer fresh signs of a hawkish pushback against a resilient labour market, leading investors to bet that interest rates may not rise much further.
In a question-and-answer session on Tuesday, Powell acknowledged that interest rates might need to move higher than expected if economic conditions remained strong but reiterated that he felt a process of disinflation was underway.
Against a basket of currencies, the US dollar index steadied at 103.31, after slipping 0.3% in the previous session.
Oil prices, a key indicator of currency parity, rose for a third straight day on Wednesday as investor concern eased about US interest rate hikes and an industry report pointed to a drop in US crude inventories.
Inter-bank market rates for dollar on Wednesday
BID Rs 273.30
OFFER Rs 275.30
Open-market movement
In the open market, the PKR gained 2 rupees for buying and one rupee for selling against USD, closing at 276 and 279, respectively.
Against Euro, the PKR gained 2 rupees for buying and 1.50 rupees for selling, closing at 292.50 and 295.50 respectively.
Against UAE Dirham, the PKR gained 90 paisas for buying and 80 paisas for selling, closing at 74.80 and 75.50, respectively.
Against Saudi Riyal, the PKR gained 70 paisas for buying and 80 paisas for selling, closing at 73 and 73.50, respectively.
Open-market rates for dollar on Wednesday
BID Rs 276
OFFER Rs 279