LAHORE: The rupee regained a further Rs1.87 or 1.4% against the dollar in inter-bank trading on Friday, to close at Rs131.9318.
On Friday morning, inter-bank trading exhibited a volatile trend as the rupee strengthened by Rs1.40 against the greenback, as it regained its value from an all-time low of Rs133.6431 touched on Tuesday.
Eventually, the rupee closed the day at Rs131.9318 against the dollar on Friday, resulting in a Rs1.87 or 1.4% gain as per official central bank market to market revaluation sheet.
According to the State Bank of Pakistan, the rupee went down by Rs0.16 to Rs133.80 on Thursday from its closing rate of Rs133.64 on Tuesday in the inter-bank market.
In the kerb market, the rupee was being quoted at Rs130 against the greenback by currency exchange dealers on Friday.
Currency dealers said people who had been hoarding dollars in anticipation of the further weakening of the rupee sold off their holdings which helped relieve pressure on the local currency.
Topline Securities CEO Sohail Mohammed in a comment to Profit said, “This looks like some profit taking. Going forward IMF conditions will decide the fate of the Pak rupee.”
According to Adnan Sheikh, Pak Kuwait Investment Co AVP Research, “This is a temporary phenomenon where it is likely that exporters are supplying dollars or speculators are reaping some profits.”
He added, “They may be of the view that the IMF loan can help boost our foreign exchange reserves and stabilize the dollar rate at current levels and which could be an ideal scenario for Pakistan but highly unlikely.”
An analyst who preferred anonymity said, “The rupees continuing ascend against the dollar is unsustainable, considering the bleak situation at the external front and is only a blip in a radar that would be shortlived.”
This was the third consecutive day, that the rupee recovered Rs3 of its value against the dollar resulting in a cumulative gain of 7.14% since touching Rs140 in the kerb market on Tuesday.
This follows the record devaluation of the rupee on Tuesday when it fell 7.5% or Rs9.371 in the inter-bank market following the government’s announcement on Monday it would be approaching the International Monetary Fund (IMF) for a bailout.
On Thursday, the rupee bounced back in the kerb market on Thursday for a second consecutive day as it gained up to Rs2 against the dollar to touch Rs133 on news that China had welcomed Saudi Arabia as a new partner in the China-Pakistan Economic Corridor (CPEC).
This is the fifth devaluation of the rupee since December 2017, which has seen the local currency losing a cumulative 27% of its value against the greenback.
On Thursday, the country’s foreign exchange reserves plunged by another $100 million to $8.3 billion which was barely enough to provide 1.5 months of import cover, as per the central bank.
According to reports, IMF and Pakistan had disagreed over the exchange rate parity, as the State Bank of Pakistan (SBP) believed the exchange rate of Rs 137 to a US dollar by end of the current financial year 2018-19 would be enough to address the challenges.
According to sources, IMF’s determination was to the contrary and they wanted the rupee to be traded above Rs 145 to a dollar.
Pakistan has been facing a crisis on the external front, with burgeoning trade & current account deficits and depleting foreign exchange reserves.
Pakistan’s gross external financing requirement has been estimated at $22-25 billion for the current financial year FY19.