The Pakistani rupee’s recovery streak continued on Friday, with an interbank gain of Rs2.02 against the US dollar.
According to the State Bank of Pakistan, the local currency closed at Rs219.92 per dollar (SBP). This represents a 0.92 percent increase from yesterday’s close of Rs221.94.
After falling close to an all-time low of Rs239.94 on September 22, the rupee has recovered by Rs19.79, or 8.26 percent, in the last 11 sessions.
According to Zafar Paracha, General Secretary of the Exchange Companies Association of Pakistan (Ecap), the rupee’s value is improving as a result of regulators’ strict monitoring and action against speculators.
Exporters who had kept their profits abroad were now bringing them back in fear of a further decline in the value of the dollar, which was improving supply, he added.
According to Paracha, the market expects the SBP’s Monetary Policy Committee to either maintain or lower interest rates at its meeting on Monday, which would strengthen the rupee even further.
Meanwhile, Tresmark’s Head of Research Komal Mansoor stated that the exchange rate was moving solely on political news, with no regard for economic fundamentals.
“Even as our default risk rises, the rupee continues to strengthen.” “This is against the rules of economics,” she observed.
She was referring to Moody’s Investors Service downgrading Pakistan’s local and foreign currency debt ratings to Caa1 from B3, citing increased government liquidity and external vulnerability risks, as well as higher debt sustainability risks, in the aftermath of the devastating floods.
“The outlook remains negative,” the New York-based rating agency said, adding that the floods had exacerbated Pakistan’s liquidity and external credit weaknesses, as well as vastly increased social spending needs, while government revenue had been severely impacted.
After seven years, the country was demoted to the C-category in March 2015.
