KARACHI: The Pakistani rupee had one of the strongest performances in Asia in October, rising by 3.3 percent against the dollar, according to a local brokerage house on Monday.
The Pakistani currency was closely followed by the Singapore dollar which appreciated by 1.38 percent, Philippine peso (1.15 percent), and South Korean won (0.46 percent).
Rupee had a successful month. In October, the rupee value of PKR increased by 3.3 percent, said Topline Securities, which cited statistics from Bloomberg. Rupee was one of the best-performing currencies in Asia, it added.
After hitting historic lows in value in both July and August, the rupee suddenly began to appreciate in the final week of September. It started appreciating following the start of Ishaq Dar's fourth term as Pakistan's finance minister.
However, the local unit was under pressure on account of the political unrest brought on by the start of the Pakistan Tehreek-e-Insaf (PTI) long march towards Islamabad, and rising worries over the nation’s risk of failing to make payments on its foreign debt.
The rupee was able to gain ground thanks to Dar's recent warning to speculators about currency manipulation and the decline of the real effective exchange rate (REER).
On Monday, the rupee closed at 220.89 per dollar, a 0.72 percent stronger than Friday’s close of 222.47 in the interbank market. It gained 50 paisa to settle at 227 per dollar in the open market.
Fahad Rauf, head of research at Ismail Iqbal Securities, said the rupee’s appreciation was due to return of Dar, which led to dollar selling in the market.
The current account deficit has also declined, which has helped in easing the pressure on reserves. Today’s recovery can be linked to the meeting of the finance minister with banks and exchange companies.
Besides, an increase in the price of Pakistani sovereign bonds caused by optimism that the country would meet its obligations to pay its foreign debt on schedule also boosted sentiment.
REER index depreciated to 90.9 in September, compared with 94.4 in the previous month, the State Bank of Pakistan reported on Sunday. The REER index shows the rupee might strengthen further in the coming days.
In addition, the expectation that Pakistan would meet its obligations to pay off its foreign debt on schedule, contributed to a surge in the price of Pakistani sovereign bonds, which helped buoy sentiments regarding the local unit.
Dar warned of strict action against those involved in currency speculation and hoarding. He said this at a meeting with the heads of banks and exchange companies on Saturday at the State Bank of Pakistan. He expects that the rupee will soon appreciate against the dollar. He claimed that the rupee’s actual value in relation to the dollar is less than 200.
The Asian Development Bank (ADB) last week released $1.5 billion to Pakistan, which was tasked with arranging $34 billion for debt servicing and external trade-related obligations during the current fiscal year.
On September 25, the World Bank said it would give Pakistan $2 billion in aid for repair and rehabilitation, including food, shelter, and other critical needs of the victims of the recent floods.
Analysts anticipate that the rupee will rise further as soon as World Bank inflows begin coming in as well. On November 1, Prime Minister Shehbaz Sharif is scheduled to visit Beijing to hold talks on the rollover of Chinese loans, which now total $26.7 billion and include public and publicly guaranteed debt.
