Rupee continues recovery against US Dollar
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The rupee's recovery against the US dollar persisted in the interbank market on Tuesday, with the greenback closing below the 300-mark.
According to the State Bank of Pakistan (SBP), the day's trading concluded with the rupee at 299.89 against the dollar, compared to the previous day's closure at Rs301.16. This signifies a 0.42% appreciation of the rupee in the interbank market today.
This marks the greenback's lowest point against the rupee in the interbank market over the past 20 days. In contrast, in the open market, the dollar remained stable at Rs300, as reported by the Exchange Companies Association of Pakistan (ECAP).
Tahir Abbas, Head of Research at Arif Habib Limited (AHL), explained that the rupee's recent gains in the open market are attributed to government actions against currency smuggling in major cities. He noted that this measure was crucial, given the continuous depreciation of the currency and IMF's demand for a 1.25% difference between the rupee-dollar exchange rate. Tahir Abbas also anticipates further correction in the rupee's value, expecting it to strengthen by Rs10-15 in the coming days.
This move follows Pakistan's crackdown on illegal currency smuggling and hoarding, which was initiated after a meeting between Chief of Army Staff (COAS) General Syed Asim Munir and business leaders in Lahore and Karachi. Gen Munir assured transparency in the currency exchange rates.
Dealers cited robust dollar inflows from exports and remittances as well as the sale of dollars by exporters as factors bolstering the rupee's strength in the interbank market. This positive trend is expected to continue in the upcoming week, supported by administrative measures.
At the beginning of September, the rupee had fallen to 333.7 against the dollar in the kerb market, causing a significant spread between the two currency markets, which has now narrowed to 1.3% from the earlier 9%, closer to the IMF's target of 1.25%.
