KARACHI: The Pakistani rupee continued to recover its strength against the US dollar as it further gained by 36 paisa in the interbank market and hit Rs156.50 during the early trade hours on Monday.
On Friday, the local currency appreciated by 66 paisa against the greenback and closed at Rs156.86 in the interbank market.
In the last two months, the rupee has improved by Rs7.39 against the dollar in the interbank market. Within two months in the open market, the US dollar has lost its value by Rs6.80 against the rupee.
Earlier, Pakistan had received higher remittance inflows from overseas Pakistanis in the first month of July of the current fiscal year 2019-20.
Currency traders were of the view that the increasing inflows of remittance in have supported the local rupee in the market.
In the earlier weeks, the rupee was observed to cumulatively depreciate against the greenback, which in turn had resulted in increased prices of goods and hardships for the general public.
The SBP has let the rupee depreciate significantly in the inter-bank market after finalising an agreement with the International Monetary Fund (IMF) for a loan programme on May 12.
The IMF has asked Pakistan to end state control of the rupee and let the currency move freely to find its equilibrium against the US dollar.
On the other hand, the World Bank Group has also supported the idea of leaving the rupee free from state control in an attempt to give much-needed boost to exports and fix a faltering economy.
In the previous weeks, the local currency has depreciated massively despite receiving the first tranche of $991.4 million from the International Monetary Fund (IMF).
The stringent conditions – on which the global moneylender has formally approved the bailout package of $6 billion for Pakistan – seem to have exerted more pressure on the local currency.
The gradual drop in the rupee had come due to high demand for the dollar against thin supply as the country continued to make aggressive international payments to partially pay off huge foreign debt and for imports.
Economists are of the view that effective measures must be implemented on the priority basis to recover the state from the balance of payment deficit.
Besides increased demand of the greenback in the local market, they had termed ‘balance of payments deficit’ as the main reason in the recent hike in the value of the US dollar.
Moreover, they had considered that state’s exports and investment were required to grow significantly, and the imports must be reduced to remove pressure on the local currency.
According to experts, the government must ensure implementations on economic policies after the deal with the IMF.
It is anticipated that the US dollar rate would fluctuate for some time, and the value of the Pakistani rupee would stabilise after proper implementation of the economic policies.
PSX gains 377 points
On the other hand, Pakistan Stock Exchange (PSX) witnessed a positive trend on Monday as the benchmark KSE-100 index gained 377 points and reached 30,049 points.
According to reports, the software of the stock market encountered malfunctioning at the early business hours on Monday, which in consequence halted the work for around 45 minutes. Last Monday, PSX had lost 830 points and closed at 30,520 points.
Earlier, the recent simmering tensions between nuclear-armed Pakistan and India over Kashmir dispute had pushed investors to adopt cautious behaviour in the trading.
Moreover, since the passage of the financial budget for the fiscal year 2019-20, the stringent policies had been reflecting themselves in the downfall of the stock market.
According to a JS Global report, “The local bourse closed positive on the rumors that Pakistan might exit the FATF grey list.” Market analysts are expecting a positive momentum at the bourse in the days to come.
