The Pakistani rupee showed resilience on its thirteenth straight trading day of losing streak, indicating a possible stabilization near the current level, marginally below Rs 287 against the US dollar in the interbank market on Wednesday.
Data from the State Bank of Pakistan (SBP) revealed that the domestic currency fell 0.18%, or Rs0.51, to close at 286.90 against the US dollar.
In the past thirteen days, the rupee has declined cumulatively by 3.50% or Rs 10.07, erasing some of the gains it made in the previous six weeks when it touched a three-month high of Rs 276.83/$ in mid. October 2023.
Market experts had predicted the rupee to stabilize around its fair value of Rs 285/$.
In the open market, the currency remained unchanged at Rs287.50/$ for the second consecutive business day, according to the Exchange Association of Pakistan (ECAP).
Reading Rupee falls to five-week low
The fall in the rupee was attributed to high foreign exchange demand from importers, while exporters reduced their US dollar sales in the interbank market.
Despite these challenges, the rupee has managed to avoid a more significant fall due to ongoing negotiations between Pakistan and Chinese commercial banks to secure around $600 million worth of new financing. This funding, expected next month, will complement the International Monetary Fund’s (IMF) second tranche of $710 million following successful talks between the government and the IMF.
These two inflows are expected to increase the supply of foreign exchange in the market, partially covering the concerns about increasing demand.
In addition, the recent drop in international oil prices to a two-and-a-half-month low suggests reduced demand for the US dollar for energy imports into the domestic economy. In addition, the government revised its estimate of the current account deficit for the financial year 2023-24, submitting a lower forecast to the IMF.
Published in The Express Tribune, November 9u2023.
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