Dollar rate falls 92 paisas to close at 124.18 rupees
Pakistani rupee has strengthened sharply against dollar.
KARACHI (Dunya News) - Dollar rate in interbank market Tuesday declined by 92 paisas to close at Rs124.18 after fluctuating between Rs124.50 and Rs124.
Earlier on Tuesday, the Pakistani rupee, after four years of pause, reversed on expectation that the country would receive ample support from China and some global financial institutions helped domestic currency to improve by 2.6 percent.
The interbank saw grand opening and rupee strengthened sharply against dollar with recovery of nearly Rs 5.36 on Tuesday.
“It was due to happen as since Friday evening dollar has been under pressure at the open market and lost nearly Rs 5 in two sessions and from high of Rs 131.50, it lost nearly Rs 6.50,” a dealer said.
The rupee finally closed at 125.10 rupee to a dollar, showing a recovery of nearly 2.1 percent from Friday close of 127.86 rupees.
“It was over reaction as ground realties have not been changed, though through election some ‘tabdeeli’ has appeared but economic woes are same, only confidence of the people have restored that the new government would adopt such measures which would be targeted towards good governance and would be corruption free. This instance has been enough for the market men, which helped dollar at open market to stage a big recovery of nearly Rs 9.50 to end at Rs 122, gold price recovered by more Rs 4700 per tola and stock market recorded a rise of more than 3000 points.
When the previous government of Nawaz Sharif came into power the dollar appreciated sharply and reached to nearly Rs 102 to Rs 104 level, but some stringent measures adopted by the than government helped rupee to recover and fell sharply. After that dollar continuous to rise at the interbank and after four years, the rupee appreciated sharply against the green back.
RUPEE BIGGEST JUMP - A FLASH IN THE PAN
Biggest jump of Pakistani rupee in a decade was probably a flash in the pan, Bloomberg reported quoting head of London Based, Aberdeen Standard Investments.
Pakistan’s finances remain dire and the rupee is likely to start weakening again soon, according to Edwin Gutierrez, the London-based head of emerging-market sovereign debt at Aberdeen Standard Investments.
Yesterday, the currency gained 2.3 percent to close at 125 per dollar on press reports of a $2 billion loan from China. Yet longer term, the incoming government of Imran Khan may have to seek a bailout from the International Monetary Fund to stave off an economic crisis, and those funds may come at the cost of a weaker rupee.
“The currency needs to adjust given the current-account deficit and the fact that they are bleeding FX reserves,” Gutierrez said. “Indeed, an IMF deal might look like the one that they recently struck with Argentina which strongly encouraged letting the currency go.”
The Argentine peso slumped to a new low in June, even after the country reached a record $50 billion agreement with the IMF just weeks earlier. By contrast, Pakistan is only seeking $10 billion to $15 billion from the multi-lateral lender, a sum that may not be enough to restore market confidence.
Pakistan’s foreign reserves fell to $15.1 billion in May from a peak of $24 billion in 2016 following a current-account deficit of $15.2 billion last year. As the central bank attempts to stem the flow, policy makers have devalued the currency four times since December.
All of that comes against a global backdrop of higher oil prices, trade war tensions and an emerging-market sell-off.
