Now Reading: Rupee Hits Five Month Highest Against Dollar as it Continues to Recover
In its slow and steady climb back up as it tries to recover, Pakistani rupee has hit its five month highest against dollar in the US interbank market on Thursday, reaching 162.46. This development comes as anticipations have risen about the improvement in the inflow of foreign currency in the upcoming future.
After peaking at Rs. 165.05 on October 1, the rupee has remained stable for the past two weeks. As per data from Capital Stake, the Pakistani Rupee has reached its highest of Rs. 162.46/US$ since May against the US Dollar in the interbank market. This marks a whopping recovery of around 3.4% from its low of Rs. 168.4353 earlier during the year.
“Steps taken by the State Bank of Pakistan are positive and the new rules and regulations discouraging illegal currency movement in the country have helped the rupee in the last few weeks,” stated the Chairman Exchange Companies Association of Pakistan (ECAP) – Chairman Zafar Paracha – on the occasion. It is to be noted that the rise of the rupee in the international market is also credited to better foreign currency inflows and lower outflows because of debt repayments and declining imports.
A.A.H Soomro, managing director at Khadim Ali Shah Bukhari Securities (a stock trading firm) showcased positive sentiment on the occasion as well. He hinted that dealers are expecting for rupee to appreciate to about 160/USD in the end of the month. He stated;
“Currency markets keeps strengthening following improvement in USD globally. Falling oil prices are going to help also. Excessive appreciation may undo the meager growth seen in Exports. The value of Rs. 162-63 is just about right. The State Bank of Pakistan may buy USD from markets, now.”
“Pakistan is expected to float Eurobond and Sukuk (Shariah-compliant bonds) in the international market in January-February 2021 to raise foreign currency financing,” BMA Capital Executive Director Saad Hashmi commented on future prospects to keep the rupee stable.
“The rupee has continued to improve on the back of receipt of healthy workers’ remittances of over $2 billion a month in the past four consecutive months, the Roshan Digital Account (RDA) initiative offering overseas Pakistanis to operate online accounts in Pakistani banks and further extension of six months in foreign debt repayment to G20 member countries”, he added.
Previously, the G20 member states postponed the due debt repayment by many countries, including Pakistan till December 2020 to provide relief during the challenging times because of the coronavirus pandemic. Now, the debt repayment has been rescheduled till June 2021 i.e. by an additional six months.
However, this might come with a catch, Prior estimates by the government suggested that Pakistan owed $1.8 billion to G20 countries until December 2020. With the six-month extension now, the amount to be paid may have increased in size with might create problems in rupee’s stability later on.