KARACHI: The Pakistani rupee is gaining against the USD and was trading at Rs165.04/ dollar earlier today, the highest the rupee has been since June 2020.
Sources state that this strengthening of the rupee is a result of inflows from the Asian Development Bank that have been realised.
Profit has contacted the State Bank of Pakistan (SBP) and ADB and is waiting for confirmation regarding the inflow.
Reserves by SBP stood at $12,701 m as of 18th September 2020. If the inflow is realized, this will bring the reserves to approximately $13,001 m.
On September 28, 2020, the ADB approved a $300 m loan to support Pakistan’s financial sector by supporting measures to develop competitive capital markets and encourage private sector investment in the country.
As for fundamentals, Komal Mansoor, Senior Analyst at Tresmark says that the upward trend in the value of the rupee over the past two days can be attributed to a number of reasons
Firstly, the enthusiastic response to the Roshan Digital Account and Naya Pakistan Certificates. Mansoor says, “These are an innovative banking and investment solution for Non-Resident Pakistanis. Our digital banking industry will get streamlined and flourish and attract forex.”
In addition, Mansoor adds that remittances have been increasing as travel restrictions are forcing many expatriates to send money through official banking channels rather than by unofficial channels (through relatives, hawala/hundi, etc).
On a trade front, she adds, “Imports have still not resumed to pre-Covid levels as economic recovery is expected to pick up by mid next year, whereas exports have started to rise gradually. This is because western countries are opening up their borders, albeit cautiously.”
However, on the other hand, the strengthening of the rupee could also be attributed to the weakening of the dollar that also plays a role in the value of the rupee.