KARACHI: The Pakistani rupee appreciated further against the US dollar in the interbank market Friday — the sixth consecutive session — after Finance Minister Ishaq Dar’s warning to speculators to stop their activities.
The local unit closed at 228.45 to a dollar after gaining 1.18 today.
It closed at 229.63 per dollar in the interbank market after appreciating 2.49 or 1.08% against the greenback on a day-on-day basis.
Muhammad Saad Ali, a capital market expert, told Geo.tv that it was indeed Dar's warning of reigning in speculation in the currency market that was driving the dollar's free fall.
But the depreciation was not limited to the warning as Pakistan is also set to receive external financial assistance in terms of flood relief, which will in turn support the exchange rate, Ali said.
A forex trader told The News that following the finance minister’s statement that no one would be permitted to manipulate the foreign exchange market, currency speculation appeared to have decreased.
The rupee is now gaining ground as a result of this.
“Sentiments are driving the rupee’s recent surge. In anticipation of a future increase in the value of the rupee, exporters are selling dollars in the market. Additionally, the IMF’s loan programme concessions and aid pledges from bilateral and multilateral sources in the wake of the floods and food crises have strengthened investors’ perceptions of the rupee,” he added.
The lower current account deficit and falling global commodity prices also support the rupee’s gain. The current account deficit narrowed 54% to $703 million in August from $1.5 billion a year ago.
The deficit is likely to remain in check on account of declining international commodity prices and administrative measures taken by the government. Inflation too has most likely peaked and was expected to come down over the coming months.