The consolidating Pakistani currency on Friday ticked up 0.06%, or Rs0.18, to Rs287.19 against the US dollar in inter-bank market after the country’s foreign exchange reserves improved slightly.

In open market, however, the currency dropped 0.67%, or Rs2, to Rs297 against the greenback, according to the Exchange Companies Association of Pakistan.

Accordingly, the gap between exchange rates in inter-bank and open markets widened to Rs10 to a dollar.

Market talk suggests the rupee recovered in the inter-bank market after the central bank reported in its latest weekly update on Thursday that Pakistan’s foreign currency reserves rose in the week ended on June 9, snapping six weeks of losing streak. The reserves grew $107 million to over $4 billion, signalling that dollar supply was higher than demand in the market, which encouraged the central bank to purchase the surplus greenback.

The dollar flow and forex reserves increased apparently on the back of higher remittances sent by overseas Pakistanis to their family members ahead of Eidul Azha. Historical data indicates that inflows accelerate before the festival.

Secondly, Pakistan’s export earnings have also risen month-on-month, providing vital contribution to the increase in forex reserves.

However, the growth in reserves may prove to be short-lived since the IMF loan programme has remained stalled for months.

Published in The Express Tribune, June 17th, 2023.

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