An increase in currency reserves supports the rupee.
An increase in currency reserves supports the rupee.
Due to increased foreign currency inflows, the Pakistani rupee strengthened on Friday and reached a new six-week high below Rs283.50 against the US dollar in the interbank market. This continued the currency’s bullish trend for the fourth day in a row.
The rupee strengthened against the US dollar by 0.09%, or Rs0.25, and ended the day at Rs283.26, according to data from the State Bank of Pakistan (SBP). According to the Exchange Companies Association of Pakistan, the currency in the open market was steady at Rs284.50/$ for the third day in a row.
An increase in Pakistan’s foreign exchange reserves held by the State Bank of Pakistan (SBP) of $21 million to $7.04 billion in the week ending December 8, 2023, provided support for the rupee. It appears that the central bank is buying extra US dollars from the market to construct its reserves.
In addition to the $700 million IMF loan tranche, Pakistan is anticipated to get $4.5 billion from bilateral and multilateral creditors in the current fiscal year, according to remarks made earlier this week by acting Finance Minister Dr. Shamshad Akhtar.
The inflows will strengthen the nation’s currency in addition to helping it reach its goal of $9 billion in foreign exchange reserves by the end of June 2024.
Over the last three weeks, there has been a net increase in the currency of 0.84%, or Rs2.38, overall. The IMF’s staff-level agreement provided it with fresh support after the $3 billion loan program’s first assessment was finished in mid-November. It will make it possible for the $700 million second loan tranche to be released in January 2024.
Talk in the market indicates that the rupee also benefited from a decline in the price of crude oil internationally.
