Rupee hits one-month high

KARACHI: The rupee hits almost one-month high on Tuesday, helped by a historic drop in the international oil prices, while easing concerns over foreign funds outflows from the government securities lifted the sentiment, traders said.

In the interbank market, the local currency ended at 161.12 against the dollar, after hitting 161.60, a level last seen on March 25, 2020. The local unit closed at 163.49 on Monday.

The rupee appreciated 1.44 percent. or Rs2.37, against the dollar during the session. It gained Rs6.77 since it had hit an all-time low of 167.89 on April 7.

The rupee rose Re2 to close at 161.50 versus the greenback in the open market.

The domestic currency gained grounds after the US crude prices plummeted to as much as minus $40/barrel, amid destruction in the demand potential by the coronavirus pandemic and lockdowns, which are paralysing the global economic activity.

Crude oil prices also have been hammered by a supply glut.

“The rupee is strengthening on the expectations of improving balance of payments’ prospects due to lower oil prices. The anticipated inflows from multilateral lenders have also added gains to the rupee’s value in recent days,” a trader said.

“The significant decline in crude prices could help reduce Pakistan’s import bill further in the coming months,” he added.

Lower oil prices narrows the country’s trade deficit, easing pressure on the currency and foreign exchange reserves. Oil is Pakistan’s largest import item and oil refineries are the largest buyers of dollars in the local market.