The Pakistani rupee has posted consecutive gains against the US dollar, appreciating another 0.14% in the interbank market on Wednesday.
According to the State Bank of Pakistan (SBP), the PKR closed at 175.48 against USD after daily appreciation of 24 paisa or 0.14%. On Tuesday, the rupee closed at 175.72 against the dollar in the interbank market, a day after dropping to its lowest level of 176.20 on November 29, 2021.
“The appreciation can be explained by several factors,” said Saad Khan, head of research at IGI Securities. Business recorder.
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âFalling commodity prices on the international market suggest that the import bill will decrease in the coming months, which would ease the pressure on the current account deficit,â Khan said.
In addition, the government has been very active in its “reserve building exercises,” the analyst said, adding that the $ 3 billion deposit agreement between the Saudi Development Fund (SDF) and SBP, as well as that the government’s decision to float $ 1 billion in Sukuk funds in the coming days would help increase foreign exchange reserves.
“The realization of these measures would allow the rupee to appreciate further.”
He added that the recent hike in the key rate would also help reduce inflation, which reached 11.5% in November.
Pakistan’s annual consumer price inflation rate reached 11.5 percent in November, the Pakistan Bureau of Statistics said earlier. This is the highest level in 21 months.
Headline inflation in Pakistan hits 11.5% in November, highest level in 21 months
Meanwhile, Saad Hashmey, executive director of BMA Capital, said Business recorder that the central bank’s measure to raise the key rate by 150 basis points “would help strengthen the local currency”.
Hashmey said the real effective exchange rate (REER) is well below 100, implying that the PKR remains undervalued and may appreciate.
“However, challenges remain on the current account front, which is expected to expand and which could impact exchange rate stability,” Hashmey said.
Interbank market rate for the dollar Wednesday
OFFER Rs 175.72
OFFER Rs 175.82
In the open market, PKR gained 70 paisas for both buying and selling against USD, closing at 176.30 and 177, respectively.
Against the euro, the PKR was unchanged on both buy and sell sides, closing at 198.10 and 200, respectively.
Against the UAE dirham, PKR gained 76 buying and 80 selling paisas, closing at 48.75 and 49.20 respectively.
Against the Saudi riyal, PKR gained 10 paisas for both buy and sell, closing at 46.40 and 46.85, respectively.
Free market rate for the dollar Wednesday
AUCTION Rs 176.30
OFFER Rs 177