Rupee expected to gain more weight

KARACHI: The winning streak of the rupee against the dollar is likely to continue after the local currency made a strong recovery during the outgoing week, currency dealers said on Saturday.

The outgoing week saw the rupee rebounding strongly against the dollar after falling to record low levels in the week ago. The local currency closed at Rs.224.04 compared to the closing level of last week at Rs239.37. The recovery of the rupee against the dollar was so strong that it posted even a gain of Rs10 against the dollar in a single day on Wednesday.

The dollar had risen to Rs.239.94, a historic high level against the rupee on the back of import payment pressure after the letter of credits (LCs) were settled in month of July for the historic high import of $7.7 billion in the month of June.

Currency dealers attributed the rupee recovery to host of reasons, especially the reduced import payment pressure, which allowed to rupee to recover. Finance Minister Miftah Ismail also confirmed that reduction in the dollar value was determined by the market forces on the basis of supply and demand mechanism with no direct intervention of the government or the central bank.

The dealers added that reduction in import payment pressure, the positive developments on International Monetary Fund (IMF) front after Pakistan’s Army Chief reached out to US officials, measures by the central bank to monitor exchange companies vigilantly produced the required results for the rupee to regain its much lost value against the dollar.

Zafar Paracha, general secretary Exchange Companies Association of Pakistan said less pressure of import payments had a big role along with the army chief’s call to USA officials to use its influence for release of IMF’s tranche for Pakistan.

He said jointed statement of the central bank and the ministry of Finance also contributed immensely when both declared that Pakistan in well-positioned to fulfill its external liabilities in the current financial year.

Also, the action of the SBP to enhance its monitoring of exchange companies as well as checking the smuggling of dollars to Afghanistan helped the local currency.

Pakistan reported more than two $2 billion less imports in the month of July, compared to month of June when import bill surged to over $7.5 billion on the back of high energy imports, which turned expensive due to their high prices in the global market.

About the future trends in dollar-rupee parity in the coming week, Paracha said there were strong signs that the rupee would continue its recovery streak against the dollar because the demand of dollar was not high compare to its supply, as exporters were seen bringing their export proceeds in the market and importers waiting for further decline before going for dollar buying for imports.