Rupee’s Value Has Risen for 27 Days Straight, A New Record

Web DeskOctober 14, 2023
Rupee's Value Has Risen for 27 Days Straight, A New Record

In Karachi, the Pakistani currency has achieved a significant milestone by maintaining a winning streak for 27 consecutive working days, the first time in three years. It reached a more than three-month high, trading below Rs278 against the US dollar in the inter-bank market. Sana Tawfik, an economist at Arif Habib Limited, predicts that the rupee will continue its winning streak in the short term, reaching Rs260-265 against the US dollar. However, she anticipates a possible decline in November-December, with the rupee depreciating to Rs290-300 by December 31, 2023.

According to the State Bank of Pakistan’s data, the rupee gained 0.35%, or Rs0.96, closing at Rs277.62/$ on Friday. Over the past 27 working days, the currency has cumulatively strengthened by 10.62%, or Rs29.48, compared to the record low of Rs307.10/$ on September 5, 2023.

Also Read: Rupee continues to strengthen due to the ongoing efforts against smuggling activities

The appreciation of the rupee is expected to lead to a reduction in the inflation rate through lower petroleum product prices in mid-October. Tawfik suggests that the strong rupee rally will be supported by recent statements from the central bank governor and their achievement of IMF targets.

The historic 27-day rupee rally began with a crackdown on currency smugglers and hoarders, which forced exporters to sell their dollar proceeds in the inter-bank market, believing that the currency would appreciate further. This action also encouraged overseas Pakistanis to send remittances through official channels, stabilizing foreign exchange reserves.

In the open market, the currency rose by 0.36%, or Rs1, closing at Rs277/$ on Friday. Over the course of a month, the currency has gained 18.41%, or Rs51, in the retail market.

Tawfik advises caution, as the rupee may face pressure in November and December due to rising imports, even with an expected reduction in the central bank’s policy rate.

Exporters are making panic sales of dollars with the expectation of further rupee appreciation, while importers are holding off on purchasing dollars until the rally stabilizes. Additionally, some exporters are believed to have made forward sales of dollars without having physical positions, planning to buy the greenback when the current rally concludes.

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