Rupee continues to rise against US dollar

• Rupee closes the day at Rs174.47 against the US dollar.
• Upsurge comes on the back of decline in imports.
• Currency dealers hopes local unit will show resilience this week.

KARACHI: Pakistani rupee continued to rise against the US dollar in the inter-bank market on Monday due to positive sentiments generated by the release of a $1 billion tranche by the International Monetary Fund (IMF).

Along with the positive development on the IMF front, the country’s imports also saw some negative growth in the month of January, creating positive sentiments in the currency market.

According to data released by State Bank of Pakistan (SBP), the local currency closed the day at Rs174.47.

With the fresh increase of 0.01%, the Pakistani rupee has depreciated by 10.74% (or Rs16.93) since the start of the current fiscal year on July 1, 2021, data released by the central bank revealed.

The rupee had maintained the downtrend for the past nine months. It has lost 14.57% (or Rs22.2) to date, compared to the record high of Rs152.27 recorded in May 2021.

Exchange Companies Association of Pakistan (ECAP) General Secretary Zafar Paracha said: “The positive development on the IMF front boosted the positivity in favour of the rupee.”

He said delay in resumption of the IMF programme for the country had put a pressure on the local currency against the dollar when it shed value but its resumption added strength in the value of the Pakistani currency.

Paracha pointed out that high imports of the country in last several month was putting immense pressure on the rupee, which resulted on its depreciation.

However, in the month of January, imports started receding and fetched a positive sign for the local currency.

He stated that the SBP’s regulations for exchange companies to divert the remittances to interbank also helped the rupee to gain strength. The SBP has offered a rupee incentive on every US dollar to exchange companies on surrendering 100% remittances in the interbank market in a push to boost foreign currency supply.

About the future outlook of dollar-rupee parity, Paracha hoped that the local unit would show resilience against the dollar in the ongoing week as positive sentiments were strong to the local currency, which would boost its strength against the foreign currency.

He was of the opinion that the dollar was still overvalued against the Pakistani currency by at least Rs10. In view of the economic indicators and positive sentiment in favour of the rupee, the dollar-rupee parity should be between Rs.160 to Rs.165, he believed.