PKR strengthens by Rs2.92 against dollar in interbank
The rupee gained Rs2.92 against the dollar during morning trade in the interbank market on Thursday.
The PKR was being traded at Rs229.2 per dollar at 1pm after appreciating 1.26 per cent from yesterday’s close of Rs232.12, data shared by the Forex Association of Pakistan (FAP) showed.
Today is the fifth consecutive session that the rupee has recovered after falling close to an all-time low of Rs239.94 on Sept 22. It has been on an uptrend since Friday, with its value improving by Rs7.59 or 3.2pc over the last four sessions.
Exchange Companies Association of Pakistan (Ecap) General Secretary Zafar Paracha said sentiments had changed mainly because of Ishaq Dar’s return as finance minister due to which the rupee was on an uptrend.
“The rupee was weakening earlier despite news of funds from the World Bank and Asian Development Bank among others. Overall, the sentiment was negative. Now, there is hope for improvement because of Dar’s reputation for keeping the dollar’s value low and managing the economy better.”
Dar, who has served as finance minister three times previously as well, is most famous for strong-arming the central bank to liberally inject foreign exchange into the market to prop up the rupee and keeping the dollar’s value around Rs90.
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Paracha acknowledged that the country’s economic situation was different now because of the conditions of the International Monetary Fund’s ongoing programme, under which Pakistan has agreed to a market-based currency exchange regime.
“Dar cannot fix the dollar. He will face difficulties … but it has to be seen what long-term policies he introduces.”
The Ecap general secretary said Pakistan’s debt has been reduced by around Rs1 trillion in the last four days because of the rupee’s appreciation. “This uptrend is very welcome and sentiments have changed after a considerable time.
“Anti-state elements such as speculators had benefitted because of the government’s wrong policies. The government will have to ensure that this uptrend does not change because of its policies.”
He pointed out that the country was facing a shortage of foreign exchange in the long run, adding that while Pakistan had to make payments of $30-40 billion this year, arrangements had only been made for $10bn.
The government should reduce imports and increase exports, and revisit the trade and immigration policies with Afghanistan and Iran because they drained the country’s foreign exchange and reserves, he suggested.
Head of Research at Tresmark, Komal Mansoor, said the PKR was strengthening because of “Dar’s fixation with having a stronger rupee”. However, the market was not taking other economic factors into account, she added.
“Many analysts are speculating the parity to touch 220 levels [and] the ambitious ones are expecting levels around 200. Anything like this should be done after taking all stakeholders in confidence, especially the IMF,” she commented.