KARACHI: The rupee rose to a seven-week high against the US currency on Wednesday, helped by better availability of dollars and improving Pakistan’s external sector outlook.
In the interbank market, the rupee closed at 282.90 to the dollar, its strongest level since November 1. The rupee had ended at 283.01 on Tuesday. However, the rupee lost 25 paisas to settle at 284.50 against the dollar in the open market.
Dealers said the rupee kept appreciating gradually because importer demand was offset by improved dollar supply caused by exporters' dollar sales. Positive sentiments about Pakistan's economy helped the local unit as well, they added.
Pakistan’s external sector outlook has improved massively under the International Monetary Fund’s $3 billion loan programme, according to a report from Taurus Securities Limited.
“Wherein, administrative measures have helped curb the grey markets for the USD, resulting in increased official flows; supporting theRupee,” it said. Workers’ remittances have also recovered complemented by a substantial drop in the trade deficit due to curtailment of the oil import bill—both translating into a lower current account deficit. The current account deficit dropped to $1.2 billion in the five months (July-November) of the current fiscal year, down 64 percent from a year earlier.
The central bank’s foreign exchange reserves have also increased substantially and are now forecast to clock in at $9 billion by June 2024. Further, Pakistan’s gross external financing needs are also expected to be fully met, the report noted.
Nevertheless, the report expects the rupee to reach 296.6 per dollar by the end of this fiscal year. “Our estimates account for the likely surge in the USD as substantial debt repayments approach early next year as well as in the build-up to the elections. Also, aggressive monetary easing may put pressure on the Rupee,” it said.