PKR sees massive recovery of over Rs10 in interbank

 

The rupee made a strong recovery in the interbank market on Wednesday, rising by more than Rs10 against the dollar. 

According to the Forex Association of Pakistan (FAP), the rupee gained 88 paise by 9:50am to reach Rs237.5 compared to yesterday’s close of Rs238.38. 

Later, the local currency recovered further and was being traded at Rs227 around 12:50pm, up Rs10.38 compared to yesterday’s close, according to Mettis Global — a web-based financial data and analytics portal. 

FAP Chairperson Malik Bostan said that the lower import bill for July had helped reduce the country’s trade deficit, which in turn had eased the pressure on the rupee. 

Business and economy journalist Khurram Husain said the rupee’s recovery was due to a sharp drop in import payments after all letters of credit for oil in July were cleared and exporters rushed to close their open positions. 

     “August likely to see lower oil-related payments with near record stockpiles of petrol & diesel in the country today. Rupee reverting to where it should be after a brief spell of extraordinary pressure in July,” he tweeted. 

According to Mettis Global, today’s remarkable recovery is “primarily attributed to the improved economic fundamentals as the import bill in July 2022 has been reduced to $4.86 billion, down by 38.31 per cent, compared to $7.88bn in the previous month”. 

Accordingly, the trade deficit for July narrowed to $2.64bn compared to a deficit of $4.96bn in the preceding month, a slump of 46.77pc. 

Bostan said part of today’s recovery was also based on expectations that the International Monetary Fund (IMF) would release its tranche soon. 

     “The difference of Rs10 between the rates in the open market and interbank market due to the smuggling of dollars into Afghanistan has been equalised because of tighter security at the border,” Bostan said. 

     “The transfer of dollars into Afghanistan has stopped, the effect of which has strengthened the rupee.”