KARACHI: The rupee rose to its strongest level in more than a month on Thursday, boosted by dollar selling by exporters and an increase in remittances from overseas workers.
The rupee ended at 292.78 per dollar in the interbank market, its highest since Aug. 15, compared with Wednesday’s close of 293.88. It gained 1.10 rupees or 0.38 percent during the session.
The rupee appreciated for the 12th successive session against the US dollar. “Exporters were offloading their dollars, and there were also inflows from remittances, which pushed the rupee higher,” said a currency dealer.
The rupee also appreciated by one rupee against the dollar in the open market, where it was quoted at 296, according to the Exchange Companies Association of Pakistan.
Rates in the inter-bank and open markets are now firmly close to each other, reducing the premium that is one of the structural benchmarks of the International Monetary Fund (IMF) programme. The government has cracked down oncurrency hoarders and smugglers, and revoked the licences of exchange companies involved in illegal forex activities. The State Bank of Pakistan has also tightened its monitoring of the currency market.
These measures have helped narrow the gap between the official and unofficial exchange rates, which had widened due to political and economic uncertainty. The rupee has gained 15 rupees against the dollar in the interbank market in the past two weeks.
Analysts said remittance flows had suffered due to the sharp rise in currency rates and the discrepancy between the official and unofficial exchange rates. They expected remittances to improve in the coming months as the government’s actions curb the hawala/hundi system and illegal exchange companies. Some banks have already reported a significant increase in remittance inflows, industry officials said.