KARACHI: The Pakistani rupee gained Rs0.10 against the US dollar on Friday, closing at Rs278.54 in the inter-bank market, reversing a two-day downward trend. This recovery comes as the country’s foreign exchange reserves received a boost, coupled with positive news from Moody’s Ratings.
The rupee had faced a cumulative loss of Rs0.32 over the previous two sessions, dipping to Rs278.64 on Thursday. However, a surge in the supply of foreign currency within the domestic market helped the local currency regain ground. The Exchange Companies Association of Pakistan (ECAP) also reported a Rs0.25 improvement in the open market, with the rupee trading at Rs279.75 per dollar after being stable at Rs280 for eight consecutive days.
The uptick in the rupee’s value is primarily attributed to a $112 million increase in the State Bank of Pakistan’s (SBP) foreign exchange reserves, which hit a six-week high of $9.40 billion on Thursday. This rise was driven by strong inflows from workers’ remittances and enhanced export earnings. The SBP has been actively purchasing surplus US dollars from the local market, contributing to the currency’s stabilization.
Market analysts believe that the rupee’s appreciation was also buoyed by Moody’s recent upgrade of Pakistan’s credit rating. The improved rating is expected to lower the cost of raising funds in international markets, aligning with the government’s plans to issue Panda and Eurobonds.
Additionally, the government’s decision to increase incentives for banks and exchange companies to attract remittances is expected to maintain a robust supply of foreign currency, providing further support to the rupee in the coming weeks. This strategic move is seen as crucial for sustaining the positive momentum in the local currency market.
