KARACHI: The Pakistan rupee posted massive gains against the dollar on Monday in the open market in line with the government’s decision to launch a crackdown against currency smugglers, hoarders and black marketers.
The greenback was trading below the Rs300 mark in the open market on Monday as the local currency recovered over Rs4 in a single day.
“The rupee has gained significantly in the open market in a week due to the government’s action against the smuggling of the currency in big cities,” said Arif Habib Limited (AHL) Head of Research Tahir Abbas while speaking to Geo.tv.
“This was a very important measure as our currency was continuously depreciating. It was also IMF’s [International Monetary Fund] demand to maintain a difference between the rupee-dollar exchange rate at 1.25%,” he added.
He said that further correction of up to Rs10-15 is expected in the coming days.
Pakistan announced a crackdown against illegal currency smugglers and hoarders following Chief of Army Staff (COAS) General Syed Asim Munir’s meeting with leading business figures in Lahore and Karachi. Gen Munir assured the business community of fostering “transparency” in the dollar exchange and interbank rates.
The rupee was poised to extend its recovery in the coming week, supported by administrative measures and robust dollar inflows from exports and remittances, The News reported citing dealers.
The sale of dollars by exporters and the return of remittances to the interbank market, spurred by the narrowing gap between the official banking market and the kerb market, helped boost the rupee’s strength.
The rupee hit a record low of 307.10 against the dollar last week after closing at 305.64 to the dollar last Monday in the interbank market. The currency started to strengthen and had risen to 302.95 at the session’s conclusion last week. In the last three straight trading sessions, the currency increased by 1.45% against the greenback.
“We have had exporters selling dollars at large scale. They were offloading dollars that’s why the rupee strengthened in the interbank market. We expect the rupee’s upward trend to continue in days ahead,” a trader at a leading commercial bank, who wished to remain anonymous, said.
At the start of September, the rupee in the kerb market plunged to 333.7 against the dollar, widening the spread between the two currency markets to almost 9%, as opposed to the 1.25% target set by the IMF.
The difference between the open market and interbank exchange rates has now shrunk to 1.3%.