The Pakistani rupee has been on an impressive upward journey against the US Dollar in the past five days. In simpler terms, the rupee is becoming stronger compared to the dollar, and this has significant implications for the country’s financial landscape.
The Upward Trend
It all started when the Pakistani rupee opened trading at 305 against the US Dollar in the interbank market. But here’s the exciting part: As the day progressed, the rupee showed its strength. At 12 PM, it reached 303, gaining approximately Rs. 3 against the dollar. This surge continued throughout the session, with the interbank rate hitting the 302 mark between 1:30 PM and 2:30 PM.
Since the caretaker government came into power, the US Dollar has lost its grip, depreciating by Rs. 13.61 against the Pakistani Rupee. This means that the rupee has become more valuable compared to the dollar, which is excellent news for Pakistan’s economy.
Open Market Rates
In the open market, where currency exchange happens between individuals and businesses, the rates also improved significantly. Starting from 338-335 on Monday, the open market rates now range between 303 and 306. At the close of the day, the Pakistani Rupee appreciated by 0.66 percent to settle at 302.95 against the dollar.
Narrowing the Gap
One of the most notable changes is the shrinking gap between interbank and open market rates. This week alone, the difference decreased by approximately Rs. 35. From 337 reported on Monday, the rates have fallen by up to Rs. 36, reaching as low as 301. However, there have been brief spikes between 302 and 307 today.
Traders have observed a significant convergence of sellers eager to exchange their dollars for rupees, likely in anticipation of the rupee-dollar rate stabilizing somewhere between 294 and 302 next week. However, it’s important to note that there’s still some uncertainty that might push the rupee below 310 again.
In a significant move, the State Bank of Pakistan (SBP) decided to introduce structural reforms in the Exchange Companies sector. The minimum capital requirement for Exchange Companies has been increased from Rs. 200 million to Rs. 500 million. Leading banks actively engaged in foreign exchange business will also establish wholly-owned Exchange Companies to meet the legitimate foreign exchange needs of the public.
Notably, the Pakistani Rupee showed strength against all major currencies in the interbank market today. It gained 91 paisas against the Australian Dollar, Rs. 1.7 against the British Pound, Rs. 1.77 against the Canadian Dollar, and Rs. 2.18 against the Euro.