The rupee extended its gains during early morning trade in the interbank market on Wednesday, rising by nearly Rs1 against the dollar. According to the Forex Association of Pakistan (FAP), the rupee gained 88 paise by 9:50am to reach Rs237.5 compared to Tuesday’s close of Rs238.38. FAP Chairperson Malik Bostan said it was expected that the International Monetary Fund (IMF) would release its tranche soon due to which the rupee had been gaining since Friday. The local currency has risen by Rs1.56 against the greenback over the last three sessions. “The difference of Rs10 between the rates in the open market and interbank market due to the smuggling of dollars into Afghanistan has been equalised because of tighter security at the border,” Bostan said.

“The transfer of dollars into Afghanistan has stopped, the effect of which has strengthened the rupee.” The FAP chairperson also pointed out that the lower import bill for July had helped reduce the country’s trade deficit, which in turn would ease the pressure on the rupee. Mettis Global Director Saad bin Naseer said the PKR was stabilising over the bleak demand outlook amid rising inflation as seen in the slump in fuel and cement sales during July. Referring to the IMF’s statement yesterday that Pakistan has completed all prior actions for the seventh and eighth review, he said the clarity on that front and expected inflows were also supporting the local currency.

“However, further strengthening of the US dollar or a flare-up in tensions between US and China over Taiwan could prove as downside risks for the rupee,” he added. Import bill dips Data released by the Pakistan Bureau of Statistics (PBS) on Tuesday showed the import bill dropped by 12.81 per cent to $4.86 billion in July from $5.57bn over the corresponding month of last year. On a month-on-month basis, the import bill dipped by 38.31pc. In June alone, the import bill edged up to $7.74bn from $6.28bn over the same month last year, reflecting an increase of 23.26pc. The decline in July will reduce pressure on the rupee-dollar exchange rate.The import bill had increased 43.45pc to $80.51bn during fiscal 2021-22, up from $56.12bn a year ago.

Credit:
Independent News Pakistan-INP