KARACHI: The rupee posted significant gains in the open market on Tuesday after banks provided $5 million to the exchange companies, dealers said.
The local unit rose 7 rupees or 2.29 percent against the dollar, according to rates published by the Exchange Companies Association of Pakistan (ECAP). The rupee was trading at 298 per dollar, compared with 305 on Monday.
In a video message to the media, ECAP president Malik Bostan stated that the central bank's order for commercial banks to supply $5 million to currency dealers caused a sudden spike of 7 rupees in the open market.
As a result, compared to a record high of 27 rupees roughly two weeks ago, the difference in the exchange rates between inter-bank and open markets has decreased to 10 rupees. Bostan expects the rupee to appreciate to 295 per dollar on Wednesday (today).
“With the help of policy actions, the government and currency dealers hope to minimise the difference between the two markets [interbank/open] by 1-2 percent (Rs3-5) fairly soon,” Bostan said.
Commercial banks provided dollars that belonged to the exchange companies. The banks had stopped giving the dealers their supplies. The dealers were better able to meet consumer demand at open market retail counters thanks to the increased supplies, according to Bostan.
“Tomorrow (Wednesday), commercial banks are expected to give currency dealers another $5 million. In the future, the narrowing gap between the two countries would contribute to increased worker remittances.”
In the interbank market, the rupee lost 0.12 percent to close at 287.97 to the dollar amid a rising demand for the greenback for imports and other payments. Due to general imports payments and payments for the defense, June has historically been a month with high outflows. Rupee exchange rates are currently volatile and could increase further in the days ahead as a result, according to dealers.
Analysts believe Pakistan will have to enter another IMF programme once the current bailout is concluded. The current IMF programme is scheduled to end on June 30 and Prime Minister Shehbaz Sharif expects the IMF to complete its 9th review before month-end.
