Rupee continues to strengthen due to the ongoing efforts against smuggling activities

Web DeskOctober 10, 20234743 min

For the ninth consecutive working day, the Pakistani currency showed signs of strengthening, reaching a new one-month high at Rs295.95 against the US dollar. This improvement, amounting to 0.30% or Rs0.90 on a day-on-day basis, is attributed to robust administrative actions such as cracking down on currency smugglers and hoarders, which augmented the supply of foreign currencies in the banking system.

Over the past nine days, the rupee has collectively appreciated by 3.76% or Rs11.15, rebounding from its all-time low of Rs307.10/$ earlier this month. This recent trend suggests that the rupee may stabilize within the range of Rs290-295/$ in the short term.

Previously, it had depreciated by 6% or Rs18.60 to the record low at Rs307.10/$ during the initial three weeks of the current caretaker government, raising concerns that the depreciation was influenced by the International Monetary Fund’s (IMF) recommendation.

Read More: PM describes smuggling as a ‘threat to existence’

Market analysts, including Topline Securities, predicted a potential downtrend in the medium to long run, speculating that the rupee might reach Rs320-340/$ in inter-bank trade by the end of the fiscal year on June 30, 2024. According to a poll conducted by Topline Research, 38% of key market participants anticipated the rupee-dollar parity to fall within the range of Rs320-340 by June 2024.

In the open market, the currency remained stable at Rs297/$ on Monday, as reported by the Exchange Companies Association of Pakistan (ECAP). Despite these improvements, Pakistan’s central bank noted that the real effective exchange rate (REER), reflecting the value of the rupee against a basket of currencies of trading partners, had depreciated to 90.1 on the REER index in August, compared to 91.59 in July.

Topline Securities indicated that this suggested the rupee was undervalued, indicating room for further recovery against the basket of currencies. The caretaker government, in collaboration with the State Bank of Pakistan (SBP), implemented various measures, such as border security enhancements to curb currency smuggling and the closure of exchange companies engaged in illicit activities, to dampen demand in the open market.

Share This Post

News Guru

WEb logo-04 (1)

We strive to bring you the most comprehensive and up-to-date news from reliable sources. Our team of experienced journalists and writers are committed to delivering unbiased and factual news, with the highest levels of professionalism and integrity.

News Guru, 2024 © All Rights Reserved