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Sunday February 25, 2024

After gains in 28 consecutive sessions, rupee depreciates against dollar

Since September 5, the rupee gained 10.9% or Rs30.3 against the greenback for consecutive 28 sessions

By Business Desk
October 17, 2023
A vendor at an exchange company counts dollars in this undated photograph. — AFP/File
A vendor at an exchange company counts dollars in this undated photograph. — AFP/File

Following 28 days of straight gains against the US dollar, the Pakistani rupee Tuesday fell due to a correction, analysts said.

The local currency fell Re0.2 or 0.07% against the dollar in the interbank market to close at 277.03, according to the State Bank of Pakistan (SBP), down from yesterday's rate of 276.83.

Since September 5, the rupee gained 10.9% or Rs30.3 against the greenback for consecutive 28 sessions.

The local currency got a boost from strong inflows caused by exporters' continuous dollar sales as they anticipated more rupee appreciation in the coming days. Exporters also sold dollars in the forward market as a result.

"I think a correction was bound to happen since there was a continuous appreciation in the rupee," Arif Habib Limited (AHL) Head of Research Tahir Abbas told Thenews.com.pk.

Abbas also noted that the rupee movement, going forward would also hinge on Pakistan's International Monetary Fund (IMF) review in November.

"After that, our multilateral inflows, imports, and remittances trends will most likely set the currency's direction," the analyst added.

Pakistan-Kuwait Head of Research Samiullah Tariq also agreed with Abbas that there was a correction.

In July, the IMF approved a nine-month $3 billion Stand-By Arrangement (SBA) for Pakistan to support the authorities’ economic stabilisation programme.

The Executive Board's approval allowed for an immediate disbursement of $1.2 billion. The remaining amount was to be phased over the programme's duration, subject to two quarterly reviews — the first is in November.

Head of Equities at Intermarket Securities Raza Jafri told Thenews.com.pk that the rupee may consolidate around current levels.

"If meaningful inflows happen, then it may resume an appreciating trend. However, going by just REER alone, the currency broadly appears fairly valued for now," he added.