According to the State Bank of Pakistan, the Pakistani rupee gained one rupee, or 0.36 percent, against the US dollar.
The dollar was trading at Rs279.51 in the interbank market at the close, indicating a positive trend.
Interbank closing #ExchangeRate for today https://t.co/bybbmTtugE#SBPExchangeRate pic.twitter.com/Exbci54vfY
— SBP (@StateBank_Pak) October 11, 2023
The dollar has gone below the Rs280 barrier for the first time since July, with previous day’s rate at Rs280.51.
This development occurred in the context of increased attention in the currency market to limit the outflow of foreign exchange.
Mohammed Sohail, CEO of Topline Securities, attributes the “record monthly gain” to local legislation’s strict adherence.
He highlighted that currency smugglers and investors were not complying, and emphasized that the longevity of this trend would be dependent on Pakistan’s IMF loan review in November, as well as the country’s efforts to replenish its decreasing foreign exchange reserves.
The Rs285 per dollar rate reflects a “sound fundamental level,” according to Tresmark’s Head of Strategy, Komal Mansoor.
She emphasizing that excessive currency volatility is harmful to firms.
She stated that exporters may experience difficulties in maintaining profit margins if the prices of Pakistani items rise when the rupee strengthens. Importers, on the other hand, may suffer significant inventory losses as a result of purchasing products at a higher exchange rate.
According to Komal, Pakistan could request that IMF reconsider its evaluation based on the REER, that expected to be 102.
If the REER number exceeds 100, the currency has an excess value and must depreciate to restore balance.
The continued weakening of the rupee against the dollar may cause the IMF concern.
Despite crackdown on illegal cash transfers, the SBP and economic officials do not anticipate an increase in remittances in September.
The central bank recorded a slightly more than 5% month-on-month growth in remittances, falling short of the expected 25% gain.
This economic crisis has led to a 20% decline in remittances in the first quarter as compared to last year.
