Rupee continues its upward trajectory

KARACHI: The rupee continued its upward trajectory against the dollar for the second consecutive day in the interbank market on Friday.

The rupee ended at 278.55 per dollar, slightly higher than its previous close of 278.68.In the open market, the local currency held its value against the dollar, closing at 280.4 for the fourth session in a row.

According to dealers, the local currency gradually gained ground against the US dollar because of the market’s matching supply and demand for dollars. Besides, a marginal rise in the foreign exchange reserves boosted investor sentiment.Pakistan’s foreign exchange reserves held by the State Bank of Pakistan increased by $51 million to $9.15 billion as of August 2. The country’s foreign exchange reserves rose by $80 million to $14.47 billion. The reserves of commercial banks increased by $29 million to $5.32 billion.

The growth of the SBP’s foreign exchange reserves was facilitated by improvement in the current account deficit, which was made possible by a rise in exports and remittances as well as a rebound of financial inflows.

With the current account deficit shrinking, reserves rising (not as borrowed reserves but rather through FX market operations), and the SBP’s forward liabilities book declining, Pakistan’s external position has greatly improved.