Rupee makes sharp recovery

KARACHI: The rupee made sharp recover of Re1 against dollar on Thursday owing to improved economic indicators, including surplus current account and government opening investment avenue for overseas Pakistanis.

The rupee ended Rs167.43 to the dollar from the previous day’s closing of Rs168.43 in the interbank foreign exchange market.

Currency experts said that the market responded to latest development of current account surplus in July 2020, contraction in trade deficit and latest statement given by the governor of the State Bank of Pakistan (SBP).

The SBP governor a day earlier in an interview to a foreign news agency stated that the central bank was seeking to tap a new pool of savings to boost foreign exchange reserves. The government will allow non-resident Pakistanis to open digital accounts from next week.

According to the SBP governor, the overseas Pakistanis can buy government debt and conduct basic banking services. The commercial banks will facilitate opening account to the non-resident Pakistanis.

According to the SBP, the current account surplus stood at $424 million in July 2020 as compared with current account deficit of $613 million in the same month of the last year.

The current account surplus may be attributed to record inflows of workers’ remittances in July 2020. In the month under review, workers’ remittances rose to $2.77 billion. This is the highest ever level of remittances in a single month in Pakistan, according to the SBP.

Exports also exhibited 6.1 percent growth to $2 billion in July 2020 as compared with $1.88 billion in the same month of the last year. On the other hand the import bill of the country declined by 0.7 percent to $3.68 billion in July 2020 as compared with $3.71 in the same month of last year, according to Pakistan Bureau of Statistics. Furthermore, the trade deficit narrowed by 7.7 percent to $1.68 billion in July 2020 as compared with the deficit of $1.83 billion in the same month of last year.