Rupee closes at 285.72/dollar interbank

KARACHI: The rupee gained for the 19th consecutive session on Tuesday boosted by dollar selling by exporters and improved remittances, raising hopes that a considerable decrease in trade deficit would ease the current account balance. In the interbank market, the rupee closed at 285.72 to the dollar, compared with 286.76 on Monday. It appreciated by 0.36 percent day-on-day.

The currency gained 50 paisas to settle at 286 per dollar in the open market. “The rupee has steadily gained ground versus the dollar as a result of exporters’ ongoing sales and improved remittance inflows,” said a currency dealer.

“The latest trade numbers also helped the rupee’s rally,” the dealer added. Pakistan’s currency has maintained its upward trend due to the recent crackdown on the unregulated grey market, structural reforms by the State Bank of Pakistan addressing foreign exchange firms, exporters selling dollars, and panic selling by hoarders.

The latest trade deficit figures for Pakistan unveiled a positive trend, showing a significant 31 percent month-on-month reduction to $1.48 billion in September 2023, said Chase Securities in a note. “This improvement, coupled with remittances ranging between $2.2 billion to

$2.4 billion, raises the prospect of a potential current account surplus. This development could act as a counterbalance to the current account deficit observed in the preceding months of July and August 2023,” it added.

The country’s trade gap fell 42 percent year-on-year to $5.3 billion in the first quarter (July-September) of the current fiscal year.

The current account deficit in August was $160 million, which was a 79 percent decrease from the same month a year earlier. The current account deficit dropped 54 percent to $935 million in the first two months of FY2024.

The decrease in the deficit was due to a decline in imports. The SBP stated in its monetary policy in July that it expected the current account deficit to be kept within the range of 0.5 to 1.5 percent of GDP in FY2024.