ISLAMABAD: The Pakistani rupee experienced a significant surge of over Rs10 against the US dollar in the interbank market on Tuesday, marking the first trading session after Pakistan secured last-minute funding from the International Monetary Fund (IMF).
According to the State Bank of Pakistan (SBP), the local currency closed at Rs275.44 per dollar, marking a remarkable increase of 3.83 percent compared to its previous closing rate of 285.99 on June 27. The currency’s surge comes after the markets remained closed for Eid holidays last week and a bank holiday on Monday.
Interbank closing #ExchangeRate for today https://t.co/hvtS9Cxq8l#SBPExchangeRate pic.twitter.com/iKvepZnJq6
— SBP (@StateBank_Pak) July 4, 2023
The approval of the stand-by agreement with the IMF was identified as the primary catalyst behind the decline of the US dollar in the domestic market, as stated by Alpha Beta Core CEO Khurram Schehzad. This development has restored investor confidence, leading to positive effects on the economy.
Also Read: Pakistani Rupee Strengthens by Rs5 Against Dollar Following IMF Agreement
Tresmark’s Head of Strategy, Komal Mansoor, predicted that the market may stabilize around the range of 272-276 for today. She also emphasized the instrumental role of the central bank in guiding the currency levels moving forward.
Panic Among US Dollar Holders
Mettis Global Director, Saad bin Naseer, highlighted the potential panic among dollar hoarders once foreign exchange reserves begin to accumulate. He further explained that such a scenario might prompt an increase in remittances through formal banking channels, as the informal hundi-hawala system would be seen as a risky alternative.
Currency dealer Zafar Paracha expressed optimism regarding the positive impact of the IMF agreement on the economy and investor confidence. He anticipated a potential rise in foreign investment in the days to come. Paracha emphasized the need for the government to focus on maintaining a low dollar rate and suggested a review of existing policies.
The recent bank holidays, resulting in a shortage of cash rupees, presented an opportunity for several money changers to purchase dollars at their own rates, which ranged between Rs275 and Rs285 on Monday. However, exchange companies reported a lack of buyers in the open market, attributing it to the State Bank of Pakistan’s decision allowing banks to purchase dollars directly from the banking market instead of relying on exchange companies.
