Rupee gains 46 paisas against dollar

KARACHI: The rupee gained 46 paisas against the dollar on Monday, amid a highly volatile trading session, dealers said.

The exchange rate ended at Rs174.77 against the dollar, compared with Rs175.23 in the interbank foreign exchange market.

The dealers said the market opened with a sharp rise in the rupee value; following the monetary policy tightening by the central bank.

The State Bank of Pakistan (SBP) on November 19, 2021, announced a significant increase in the key policy rate by 150 basis points to 8.75 per cent. The central bank surprised the market with a sharp increase in key policy rate. However, it said the policy tightening would help arrest inflation and ease the money market to reduce pressure on the local unit.

The dealers said the foreign exchange market remained volatile, as the exchange rate recorded a gain in the rupee value to Rs173.05 against the greenback.

Later, the International Monetary Fund (IMF) announced to reach an agreement with Pakistan and delay in transfer of the next tranche adversely affected the market.

The dealers said the latest efforts of the SBP might not help stabilise the exchange rate until foreign inflows were not materialised.

They said the Saudi government had pledged $3 billion as cash transfer to Pakistan for assisting in the balance of payment; however, such amount was still not transferred to the SBP, sending negative signals to the market.

The local currency is also under immense pressure due to the widening of the current account deficit. Pakistan’s current account deficit sharply widened to $5.08 billion during the first four months (July-October) of the current fiscal year, compared with a surplus of $1.31 billion in the same period of the last year.

The rupee remained under pressure since the start of the current fiscal year. The local currency fell Rs17.23, or 10.93 per cent from June 30, 2021 closing of Rs157.54 to the closing of Rs174.77 on November 22, 2021.

The local unit hit the all-time low of Rs175.73 against the dollar on November 12, 2021 in the interbank foreign exchange market.

In the open market, the buying and selling of the dollar have been recorded at Rs175/Rs176.50 at the time of filing this report.

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