Rupee recovers 40 paisas against dollar

KARACHI: The rupee continued to recover against the dollar on Tuesday, as it gained 40 paisas; following measures taken by the central bank regarding increase in the average cash reserve requirements to 6 per cent.

It is the second straight day of recovery in the rupee value. The exchange rate ended at Rs174.89 against the greenback from last day’s closing of Rs175.29 in the interbank foreign exchange market.

On Saturday, the State Bank of Pakistan (SBP) had announced an increase in the average Cash Reserves Requirement (CRR) to 6 per cent to support the local currency.

A statement issued by the central bank said it decided to increase the average CRR, to be maintained during a period of two weeks by scheduled banks, from 5 per cent to 6 per cent and the minimum CRR to be maintained each day from 3 per cent to 4 per cent.

CRR is the amount of money that the banks are required to keep with the State Bank and is applicable on the demand and time liabilities with the tenor of less than a year.

The time liabilities with the tenor of more than a year would continue to be exempted from the maintenance of cash reserves.

The SBP took the measure after the local currency hit an all-time low of Rs175.73 against the dollar on November 12, 2021.

Dealers said the rupee may further recover in case of realisation of the inflows announced under the Saudi assistance package and the IMF tranche.

The Saudi government pledged $3 billion on October 26, 2021 that was to be transferred directly to the State Bank of Pakistan.

The large imports are continuously increasing the dollar demand. The import bill registered a growth of 65.15 per cent to $25.06 billion during July–October 2021, compared with $15.17 billion in the same period of the last fiscal year, according to the Pakistan Bureau of Statistics.

The rupee remained under pressure since the start of the current fiscal year. It fell Rs17.35, or 11.01 per cent, from June 30, 2021 closing of Rs157.54 to the closing of Rs174.89 on November 16, 2021.

Meanwhile, the buying and selling of the dollar in the open market has been recorded at Rs176.30/Rs177.80.