Rupee continues to make sharp recovery against dollar

• The rupee made another sharp recovery of Rs2.65 against the dollar on Thursday.
• The exchange rate ended at Rs226.15 in the interbank foreign exchange market.
• The local unit is making a continuous recovery after reports appeared regarding the Pakistan Army chief making a phone call to the US.

KARACHI: The rupee made another sharp recovery of Rs2.65 against the dollar on Thursday, as the exchange rate ended at Rs226.15 in the interbank foreign exchange market, dealers said.

The exchange rate closed at Rs228.80 against the dollar a day ago.

The local unit recorded a massive recovery during the last five sessions, especially during the last two days.

The rupee hit the historic low of Rs239.94 against the dollar on July 28, 2022. Since then, the local currency recorded a gain of Rs13.79 against the greenback by the end of trading on August 4, 2022.

The local unit is making a continuous recovery after reports appeared regarding Pakistan Army chief made a phone call to the US to push the International Monetary Fund (IMF) to speed up the transfer of the next tranche.

Experts said the State Bank of Pakistan (SBP) had tightened monitoring of the exchange companies.

The SBP initiated inspection against the exchange companies on August 1, 2022. On August 2, 2022, it suspended the operations of four branches of two exchange companies (Galaxy Exchange Co and Al-Hameed International Money Exchange Co) for violation of the SBP regulations.

The central bank also imposed monetary penalties on some exchange companies in the recent past. Besides, due to the violations of the SBP instructions, arrangements of 13 franchises have been terminated by six different exchange companies.

The experts believe that the rupee was also supported by a reduction in the trade deficit during the first month of the current fiscal year.

The trade deficit narrowed 18.33 per cent to $2.62 billion for July 2022, compared with the deficit of $3.23 billion in the same month of the last year.

The trade deficit was mainly contracted due to a 12.8 per cent decline in the import bill during the month under review. The import bill of the country was reduced to $4.86 billion in July 2022, compared with $5.57 billion in the same month of the last year.

However, the experts expressed concerns over a massive decline in the foreign exchange reserves. They said the expected inflows from the International Monetary Fund (IMF) would help the country’s external sector.

They also said the flow of the IMF funds would also open doors to other bilateral and multilateral funding for Pakistan.

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Rupee continues to recover against dollar

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