Friday Feb 24, 2023

Rupee's winning streak against dollar enters third day

An undated image of a currency dealer counting $100 notes with the help of a machine. — AFP/File
An undated image of a currency dealer counting $100 notes with the help of a machine. — AFP/File

  • Rupee closes below psychological level of 260.
  • Local unit regains Rs2.52 in past three consecutive days.
  • Currency strengthens as supply continues to increase.

The Pakistani rupee extended its winning streak for the third day as supply continued to increase consistently compared to its demand in the system in the currency market.

The local unit gained 0.36% against the US dollar to close below the psychological level of 260 after a hiatus of 20 days in the interbank market on Friday.

It closed the day at Rs259.99, according to the State Bank of Pakistan (SBP) data. The currency has regained 0.96% (or Rs2.52) in the past three consecutive working days.

Exporters are selling dollars in the market amid the rupee’s appreciation. Earlier, they withheld dollar supplies in anticipation of more depreciation of the local currency.

Meanwhile, foreign exchange reserves held by the central bank slightly increased by $66 million to $3.25 billion in the week ending February 17.

The nation is struggling to pay off its extraordinarily high levels of external debt and barely has enough dollars to cover less than three weeks’ worth of imports.

Analysts were once more taken aback by the latest foreign exchange numbers and were unable to pinpoint the reasons why the reserves had improved during the week under review.

However, analysts assumed that the reserves were improving due to improvements in remittances and exports.

“The flows have improved on account of remittances and exports. Market sources also suggest that SBP has been buying dollars to shore up reserves,” said Fahad Rauf, the head of research at Ismail Iqbal Securities.

The rupee is expected to strengthen further against the dollar once Pakistan receives $700 million from China Development Bank (CDB) — formalities of which have been completed by the board.