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Dollar price in Pakistan: In interbank trade, the dollar reverses its downward trend and gains 50 paisa

Dollar price in Pakistan: In interbank trade, the dollar reverses its downward trend and gains 50 paisa

After a minor rise in the morning, the rupee lost ground against the dollar in the interbank market on Wednesday afternoon.

The greenback was selling at Rs202.50 about 12:30pm, up 50 paisa from the previous day’s close of Rs202, according to the Forex Association of Pakistan (FAP). (The FAP’s closing rate from the previous session is lower than the State Bank of Pakistan’s official rate of Rs202.83.)

Around 11:50 a.m., the dollar was trading at Rs201.45, having lost 55 paisa against the local currency.

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‘End to speculation’

The rejection of reports by the government and SBP about authorities intending to place restrictions on foreign currency accounts as a reason behind the greenback’s transient decline, Zafar ParachaExchange Companies Association of Pakistan Genera

He went on to say that Prime Minister Shehbaz Sharif had ordered the SBP to take action against banks engaged in “satta bazi” (speculation), which had resulted in a considerable drop in the dollar’s rate and the exchange rate stabilising.

Analysts linked the rupee’s recovery to an SBP “meeting with commercial banks on currency rate destabilisation,” according to Mettis Global, a web-based financial data and analytics service.

Paracha told Mettis Global that “the rupee has been undergoing strong oscillations in its downward trajectory this fiscal year, allowing considerable room for speculators to maximise their benefits.”

FAP Chairman Malik Bostan further attributed the rupee’s rebound to the government and the State Bank of Pakistan refuting concerns that foreign currency accounts will be restricted.

“Satta baz who were influencing the rupee’s slide have stopped doing so as a result of the denial of these reports, and as a result, the currency has risen,” he explained.

Furthermore, he stated that “pressure on the rupee has largely decreased since oil payments have been made.”

‘Tough decisions, cap on imports expected’

Bostan also mentioned that the government had promised that in the future budget, it would make harsh decisions to limit imports and, as a result, lower the dollar’s value.

“The federal cabinet is expected to adopt the restriction on non-essential imports soon, resulting in a considerable drop in imports,” he stated. “As a result of these rumours, the dollar has dropped today.”

Positive outlook

“There was some dollar selling by institutions when REER (real effective exchange rate) data was published, revealing an undervalued rupee,” said Komal Mansoor, Tresmark’s head of research.

“However, when dollar liquidity is enough and uncertainty about future flows is addressed, persistent gains will emerge,” she said.

“We foresee that this heat is about to cool down and it’s a matter of one or two important developments that are almost at the final stage,” Mettis Global director Saad Bin Naseer said, adding that while the exchange rate had been facing the heat of depreciation for several sessions, “we foresee that this heat is about to cool down and it’s a matter of one or two important developments that are almost at the final stage.”

“First, there’s the IMF’s [resumption of the loan facility], then there’s the Saudi Arabia money rollover, and finally, there’s the treasury flow from Beijing,” he continued. “It is important to note that the Prime Minister’s visit to China is approaching, and a delegation will be flying to China very soon.”

“Current levels are also favourable for exporters,” he continued, “and all they need is confirmation of no more significant decline from current levels.”

RELATED: Dollar price in Pakistan rises to Rs 203 as rupee hit all time low

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Sibtain Ali is a Senior Editor Business at Pakistan Lounge and joined in October 2021. Formerly business editor at a renowned International News website

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