From Zeeshan Mirza
KARACHI: The Pakistan rupee’s winning streak against the US dollar has completed one month today (Thursday) with the local currency gaining 23.50 against the greenback since September 5 in the interbank market — thanks to the military-backed crackdown against currency smugglers.
The local currency closed at 283.62 per dollar in the interbank market, according to data from the State Bank of Pakistan (SBP), after a change of Rs1.06 or 0.37%.
On September 5, the Pakistani rupee tumbled to 307.10 against the dollar in the interbank market. Since then, the Pakistani rupee has been on a recovery after the military-backed crackdown launched a crackdown on currency smugglers, hoarders, and speculators.
According to analysts, the rupee kept increasing as a result of a decline in the black market’s demand for dollars.
“In my view, PKR appreciated against the dollar as illegal demand vanished after the crackdown,” said Samiullah Tariq, the head of research at Pak-Kuwait Investment Company.
In the days to come, Tariq thinks that the rupee would strengthen to 280 to the dollar. Mustafa Mustansir, the head of research at Taurus Securities said the main reason for the rise in the value of the rupee is the crackdown on the grey markets and illegal hoarding of dollars.
“Plus, we believe that the illegal flow of dollars to Afghanistan has also stopped,” Mustansir said. “Further, the restructuring of the exchange companies sector by the SBP has also had a significant impact. Overall, these measures have led to heavy selling of dollars in the open market. I think the rally will continue,” he added.
The rupee’s near-term outlook is expected to be positive, but its medium-term future course will be determined by the state of the country’s economic fundamentals, especially the conclusion of the International Monetary Fund’s review of the stand-by arrangement (SBA) and the position of the foreign exchange reserves. In late October or early November 2023, there will likely be an IMF review.
