Strengthening Rupee Crosses Another Milestone Against US Dollar

Pakistani rupee continued its recovery against the US Dollar in the interbank market today.

The Rupee appreciated by 31 paisas against the US dollar in the interbank trading and was closed at Rs. 161.82 against the previous day’s closing of 162.13. The US Dollar fell below the 162 level for the first time since the end of May.

On August 26, 2020, the exchange rate of the Pakistani Rupee had hit a historical low of Rs. 168.43 against the US Dollar in the interbank market. Since then, the local currency has recovered Rs. 6.61 in interbank, till today.

Yaqoob Abubakar from Tresmark, an application that tracks financial markets said that the rupee is appreciating continuously due to positive economic indicators like the Current Account Deficit has turned into Surplus owing to lower imports and better inflows.

In the ongoing week, it has appreciated by 67 paisas. The market expects that the Rupee has the potential to break the 160/$ level by the end of December 2020, he added.

A.A.H Soomro, managing director at Khadim Ali Shah Bukhari Securities told ProPakistani,

The continuous weakening of USD in international markets is pulling the Rupee back to fair values. Signs of stability.

The consistent inflows of foreign exchange in the country due to overseas’ remittances, investments through Roshan digital accounts, and export receipt maintained a favorable balance of supply and demand of the greenback in the local market causing Rupee-USD parity to gain stability gradually.

Pakistan has received significant inflows in the form of remittances in the last couple of months. The measures taken by the State Bank of Pakistan (SBP) to encourage overseas Pakistanis to send money home through legal channels have started to show results.

One of the main factors behind the recovery of the rupee is that Pakistan booked an adequate current account surplus in the first quarter of the fiscal year (July-Sep FY21). If the country manages to keep the current account in surplus for months to come, further recovery in the rupee’s value is possible.

The current account maintained a surplus in the third straight month with a huge surplus of $792 million during the first quarter of the current financial year 2020-21 mainly on the healthy inflows of remittances and control over import bill.

The foreign exchange reserves of the country surged by $268 million till the week ending on October 16.

According to the data released by the State Bank of Pakistan (SBP), the foreign exchange reserves maintained by the central bank have surged to $ 12.066 billion whereas the foreign exchange maintained by commercial banks stood at $7.235 billion.