The rupee, which recovered four percent last week, continued to appreciate on Monday.
The rupee, which recovered four percent last week, continued to appreciate on Monday.
According to the State Bank of Pakistan (SBP), the local currency closed at Rs213.98 per dollar, up from Rs1.51 or 0.71 percent.
The chairman of the Pakistan Forex Association (FAP), Malik Bostan, attributed the rupee increase to the letter of intent from the International Monetary Fund (IMF) and assistance reports from friendly countries, especially Saudi Arabia.
He said the market expected the IMF payment to be received soon, which would increase the country’s foreign exchange reserves.
The FAP president said the real price of the greenback was between 190 and 200. Speculators had “artificially increased it due to economic problems and the risk of default.” He added. But that the dollar would return to its real price soon.
Mettis global director Saad bin Naseer said the local currency had risen. Dollars were flowing into the country, adding that more inflows are expected.
Must Read: Oil Extends Losses due to the Global Slowdown and the Possibility of Increased Supply
Exporters, who had been holding their dollars overseas, were also bringing them to Pakistan before. The dollar was depreciating rapidly, he added.
Naseer said there was “pressure” as exporters approached the government. Other bodies urge them to stabilize the exchange rate as they faced losses. “But this will always happen. The best suggestion is that the dollars are converted into rupees. On the same day the export [shipment] is sent and the government and banks should sign a memorandum of understanding in this regard. That will put an end to the uncertainty.”
He also said the rupee would continue to strengthen and gain in the coming days if the political situation remained stable.
“The start of this week has been very good. The positive news comes from all fronts because feelings have changed,” said Zafar Paracha. Zafar Paracha secretary general of the Pakistan Stock Exchange Companies Association (Ecap).
He added that because of the positive developments, exporters who had before holding on to dollars were looking to sell them. Importers were expecting the dollar to fall further.
Paracha said there were reports that Saudi Arabia would renew a $3 billion loan and provide oil in deferred payments. The IMF tranche would be received soon, so the PKR was recovering.
Overseas Pakistanis and exchange companies have played a very important role in the recovery of the rupee, he said. The secretary general of Ecap called for incentives and discounts to be given to foreign Pakistanis and exchange companies, in addition to designating them as an “export industry”.
Tresmark research chief Komal Mansoor said the market was optimistic that the IMF tranche would be received by the end of the month. “Weak demand for the dollar, further driven by falling oil prices, a stable political outlook, and easing of U.S. inflationary pressures, is also supporting the [exchange rate].”
