The Pakistani rupee strengthened throughout the previous week, gaining 1.4% against the US dollar in the interbank market, and is expected to be this month’s best-performing currency.
The dollar’s value at the end of trading on Thursday was Rs287.74, down 4.02 or 1.4% from the previous week, according to the State Bank of Pakistan. It had a week ago closed at Rs. 291.76. Since Monday, the rupee has consistently appreciated versus the dollar.
The rupee had fallen to a record low against the dollar on September 5 of 307.1, but has since recovered significantly as a result of steps taken the following day to stop the country’s illicit market. These steps were taken by the security agencies and financial regulator.
Dealers claimed that as a result of the campaign against black market traders, tens of millions of dollars flowed back into Pakistan’s interbank and open markets.
The local currency has increased by about 6.1% so far.
The finance ministry had stated in its monthly report that “the government’s stern administrative action against the unlawful foreign exchange dealers and hoarders in commodity markets is stabilizing the exchange rate, providing a respite to the imported inflation, and easing out commodity prices.”
The open market price of the dollar was Rs332 before to the crackdown. According to the Exchange Companies Association of Pakistan (ECAP), the dollar dropped to Rs288.5 in the open market on Thursday, a pattern that persisted all week.
However, analysts advise “attracting foreign direct investment (FDI) into export-oriented sectors” in order for the upward trajectory to be sustained.
“While the data does not accurately represent the steep decline that preceded this performance, the rupee has in fact done well. The performance of the Pakistani rupee has been among the worst in recent years, according to Fahad Rauf, Head of Research at Ismail Iqbal Securities, who spoke to Reuters.
The head of research and development at Pak-Kuwait Investment Company, Samiullah Tariq, expressed confidence towards a growing rupee but emphasized the necessity for a steady infusion of funds in the upcoming months to enhance the PKR’s position. Although attitudes have improved, he pointed out that the rupee’s year-over-year performance has not changed.
Mohammed Sohail, CEO of Topline Securities, anticipated that regulatory efforts will cause the rupee to rise in the near future. In the short term, he asserted, the currency’s fate will depend on economic fundamentals, particularly on the level of foreign exchange reserves and the results of the IMF loan review in November.
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