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Tuesday December 06, 2022

PKR to dollar: Rupee gains further strength after Ishaq Dar’s warning

Dollar trades at Rs229.62 in interbank market after declining by Rs2.5

By Web Desk
September 29, 2022
A currency dealer counts Rs5,000 notes in this AFP file photo.
A currency dealer counts Rs5,000 notes in this AFP file photo. 

KARACHI: The rupee gained in value Thursday for the fifth consecutive trading session against the dollar after a change of leadership at the Ministry of Finance and a warning from Ishaq Dar to the speculators playing with the local currency.

In the interbank market during the intraday trade, the dollar's value declined by 2.5 to 229.62 per rupee, down from the previous session's close of 232.12.

The return of Ishaq Dar — a close aide of PML-N supremo Nawaz Sharif — as the country's finance minister has helped improve sentiment and the fall in international commodity prices boosted the rupee’s rise.

In conversation with Geo.tv, economist and former adviser to the federal ministry of finance Dr Khaqan Hassan Najeeb said the first aspect is a change in market sentiment driven by a leadership change at the finance ministry.

"The new team is regarded to be more conscious of rupee movement and thus leaning to more orderly movement," the former adviser said.

Secondly, he noted that some fundamentals have improved, especially a decline in oil prices as well as other key commodity prices, which may help reduce the quantum of imports.

The current account deficit — fortunately — will also likely remain in check on account of declining global commodity prices and administrative measures taken by the government.

Inflation, too, has most likely peaked and is expected to come down over the coming months.

Dr Najeeb further noted that the confirmation by multilateral lenders — World Bank and the Asian Development Bank — to extend flood support is a market-supporting development.

The economist further said that it is a bit farfetched, but the possibility of reconsideration and leniency in some conditions by the International Monetary Fund (IMF) due to flood impact is driving a positive sentiment toward the rupee.

The new finance czar — who has strongly favoured intervention in currency markets in three previous stints in the job — also claims that the value of the local unit is undervalued and he will seek to control inflation by lowering the interest rates.

Dar has also warned the speculators against manipulating the currency market.