ISLAMABAD – The Pakistani rupee appreciated during the weekend, as it roseto its five-month high against US dollar and UAE dirham.
The Rupee appreciated to Rs. 154.70 showing a gain of 5.2 % since June 2019when the rupee was trading at 163.4, its lowest level ever. Similarly, therupee has gained nearly 5.1% versus Dirham since June, as it strengthenedfrom 44.5 on June 30 to 42.1 on the weekend.
In the open market, the rupee was trading at 41.9 versus dirham and 154.65versus the greenback.
This was due to the high inflows from foreign funds, as the increase in USdollar from lending agencies and foreign investment in the governmentpapers helped stabilize rupee-dollar parity. Commenting on the rupee’sgains against the dollar, some experts say that the rupee is likely toappreciate in the coming days.
The Currency dealers expect the rupee to rise further in the coming monthsin the wake of higher inflows of dollars and increased attraction of localcurrency. The dollar will depreciate gradually versus the rupee due tofalling demand by the investors and common persons, they said.
Samiullah Tariq, director of research at Karachi-based Arif Habib Limited,said that the rupee was trading at its highest against the greenback sinceJune 14, 2019. “Rupee closed at 155.07/US dollar in interbank market,appreciating by 3.1 percent. The bid for dollar closed at 154.87, breachingthe psychological level of Rs. 155 and surged to five-month high,” Tariqsaid in a note released on Sunday.
Currency dealers said the gradual appreciation of rupee helped stabilizethe exchange rate which remained range-bound in the Rs. 155-156 bracket forthe last few months.
Read Top Stories
The dollar in the open market usually trades above the inter-bank rates butfor the last couple of months, the open market rates have treaded closer tothe inter-bank rates.
“One of the biggest reasons is that the country has come out from hugecurrent account deficit of $20 billion in FY18 and now[in] October, [it]posted a surplus for the first time after four years,” stated ForexAssociation of Pakistan President, Malik Bostan.
He said that both risk and attraction for dollar investment has gone. Nowthose holding dollars are liquidating them to get rupee and benefit fromthe much higher returns on the local currency deposits. Due to a highpolicy interest rate of 13.25%, the local currency investors could getdouble-digit returns on long-term deposits.
Under the Special Policy-Based Loan (SPBL) Facility, Asian Development Bankhas committed to providing USD 1 billion for Economic StabilizationProgram. Another US$ 300 Million is allocated to Energy Sector Reforms &Financial Sustainability Program (Subprogram 1).
Last week, Moody’s Investors Service upgraded Pakistan’s outlook fromnegative to stable due to stability in economic indicators.
