KARACHI:
Pakistani currency gained Rs0.10 and wiped out the nominal loss suffered so far in the first seven weeks of current fiscal year, settling at the previous fiscal year’s closing level of Rs278.34/$ in the inter-bank market on Tuesday. On the other hand, gold rose Rs700 to a new all-time high of Rs260,700 per tola in line with the global trend.
According to the State Bank of Pakistan data, the rupee maintained its uptrend for the third consecutive working day as it recovered a cumulative Rs0.36/$ over the three-day period. The increase in currency rate came in the backdrop of continuous selling of exporters’ proceeds, which fueled a surge in supply of the foreign currency in the inter-bank market.
Robust inflows of remittances sent home by overseas Pakistanis kept dollar supply in surplus compared to its muted demand for import payments. The rupee appreciation coincided with reports of a modest current account deficit of $162 million for July, according to the SBP data, which eased pressure on the currency in the short to medium run.
The currency market, however, continued to ignore the development that Pakistan had not yet been on the IMF executive board meeting agenda for August, which was notified a day ago. The government has already reached a staff-level agreement with the global lender for a new $7 billion Extended Fund Facility in mid-July.
The IMF board, however, has delayed its final approval for kicking off the loan programme. Any significant delay may pile pressure on the rupee compared to the greenback. Exchange Companies Association of Pakistan reported that the rupee appreciated Rs0.10 on a day-on-day basis, closing at Rs280.20/$ in the open market.
A day ago, the central bank reported that Pakistan’s real effective exchange rate (REER) appreciated to 101.47 in July 2024, apparently putting some pressure on exports. REER index had been at 100.06 in June, which indicated that the trend reversed in July in relation to the depreciation seen in June on a month-on-month basis. In May, the index stood at 100.69.
The uptrend in REER signals that the rupee has grown stronger over the past one month and the ongoing speculation about depreciation against the greenback and other currencies may come true ahead of the IMF loan programme.
Among precious metals, gold continued to hover around record high levels as it rose $10 to $2,512 per ounce in the international market, according to the All Pakistan Sarafa Gems and Jewellers Association.
Some of the global financial institutions speculated that the metal may test new highs around $2,600-2,700/ounce in the current calendar year. At the same time, a correction of $300-400 million cannot be ruled out as bullion has gained $700 over the past one year.
