On Thursday, the rupee maintained its advances against the dollar for a fifth straight day in the interbank market.
According to the State Bank of Pakistan, the local currency increased by Rs2.65 or 1.17 percent from yesterday’s close to close at Rs226.15 (SBP).
— SBP (@StateBank_Pak) August 4, 2022
The decreased import bill for July, which was anticipated to drop even more in August, according to Zafar Paracha, general secretary of the Exchange Companies Association of Pakistan (Ecap), was one of the factors contributing to the rupee’s rebound.
“Since we have enough supplies for almost two months, we won’t need to import oil [in August]. Internationally, the cost of edible oil, beans, gas, and coal has decreased. As a result, the rupee is under less pressure and the import bill has decreased.
The Pakistan Bureau of Statistics (PBS) released data on Tuesday showing that the import bill decreased by 12.81 percent to $4.86 billion in July from $5.57 billion in the same month previous year. The import bill decreased by 38.31% month over month.
Data provided by the Forex Association of Pakistan shows that at 12:55 PM, the dollar was trading at Rs 221 in the open market (FAP).
The local currency saw its biggest one-day rise in years the day before, jumping Rs9.59 or 4.2% in the interbank market to settle at Rs228.80.
According to data from the central bank, the rupee’s rise was the greatest since 1999, according to Fahad Rauf, head of research at Ismail Iqbal Securities, who spoke to Reuters.
The rupee had been battered against the dollar for two weeks when, on July 28, it reached its lowest point, closing at 239.94. After then, it began to recover, increasing by Rs11.5 until Wednesday.
The State Bank of Pakistan’s (SBP) function in this regard was also acknowledged by Paracha. He pointed out that the central bank had been working for the previous two to three days and had released a statement on Sunday in conjunction with the ministry of finance stating that there was no risk of default and that the nation’s financing requirements would be more than adequately met in the current fiscal year.
This was also beneficial. Additionally, the government authorities contributed favourably.
However, the rupee is still overvalued, according to the Ecap secretary general, and has to rebound to Rs 190 in the medium term and Rs 160 in the long run. The dollar is more expensive in Pakistan than it is everywhere else in the area, he claimed.
Since the International Monetary Fund (IMF) announced that Pakistan has finished the final prior step necessary for the review, exporters have been selling dollars on the spot and forward markets, according to Komal Mansoor, head of research at Tresmark.
She said, “The rupee has further risen due to the enhanced supply and minimal outflows.