KARACHI: Pakistani rupee snapped its five-week losing streak against the US dollar and appreciated last week by 8.68 percent in open market and 0.82 percent in the interbank market.
According to details, the local unit closed the week in the range of 301-305 against the dollar in the open market on Friday after opening the week at 330-334 on Monday, rising by Rs29 (+8.68 percent).
According to the figures shared by the State Bank of Pakistan, the rupee opened at 305.47 against the US dollar in the interbank market on Monday last and closed at 302.95 on Friday, going up by Rs2.52 (+0.82 percent) against the greenback. However, rupee has depreciated in the interbank market by Rs16.96 during the current fiscal year 2023-24 and Rs75.52 in the current year.
With the latest appreciation, the gap between the interbank and open market has narrowed to 0.57 percent. Being under an International Monetary Fund (IMF) programme, the exchange rate gap between the inter-bank and open markets – called the premium by the IMF in its country report on Pakistan published after the Stand-By Arrangement’s approval by the Executive Board – needs to be around 1.25 percent.
Currency dealers attributed the current row of appreciation of the rupee to the Chief of Army Staff (COAS) Asim Munir’s meetup with the business community on Sunday last. During the meeting, the army chief discussed the government’s economic plans and intentions to quell smuggling and speculative activity.
The development comes two days after the central bank decided to introduce structural reforms in the exchange companies’ sector in order to provide “better services to the general public and bring transparency and competitiveness”.
Caretaker Federal Minister for Finance and Revenue Dr Shamshad Akhtar stated at the Special Investment Facilitation Council (SIFC) Apex Committee meeting on Friday that a total of $6 billion dollar inflows are expected within fiscal year 2024, offering some optimism for the economic outlook of the country. An IMF review is scheduled for November and it is hoped that by December, Pakistan will secure a loan from the IMF, although the exact amount remains uncertain, she added.
Moreover, the government is actively working to combat issues such as smuggling and hoarding, which have exacerbated the economic challenges. Additionally, she stated that development is ongoing to privatize State-Owned Enterprises (SOEs), potentially opening up new avenues for economic growth and efficiency.
Meanwhile, foreign exchange reserves held by the SBP decreased by another $70 million on a weekly basis, clocking in at $7.779 billion as of September 1, data released on Thursday showed. Total liquid foreign reserves held by the country stood at $13.127 billion. Net foreign reserves held by commercial banks stood at $5.347 billion. The central bank cited debt repayments as the reason for the decrease in foreign currency reserves.
In the preceding week, foreign exchange reserves held by the SBP had decreased by $81 million. In three weeks, the dollar stockpile has dropped by $276 million. – TLTP