The rupee continued its upward trajectory on Tuesday against the dollar during morning trade in the interbank market, with analysts attributing the gains to an ongoing crackdown seeking to check illegal outflows of the greenback.
The local currency closed at Rs299.89 in the interbank market after gaining Rs1.27 against the previous close of 301.16, according to the State Bank of Pakistan.
In the open market, the greenback was being bought for Rs296 and sold at Rs299, according to the Exchange Companies Association of Pakistan. “The rise in the open market rate can be attributed to regulatory reforms implemented in the money exchange sector,” said Syed Faran Rizvi of JS Global Capital. “These reforms have significantly narrowed the gap between the open market and intermarket rates, reducing it from a recent high of 9pc to nearly zero.”
Intermarket Securities’ Head of Equities Raza Jafri said the PKR’s recent appreciation “appears to largely be driven by administrative measures”.
He added that it could be argued that the exchange rate “is broadly near market-clearing levels given that the August trade deficit was roughly equal to remittances”.
Topline Securities Chief Executive Officer Mohammad Sohail said that the crackdown on the illegal currency business was having an impact on speculators and hoarders. “Not only is the PKR is appreciating, but the premium of the open market is almost gone, thereby providing some confidence to investors and business community,” he said.
Currency dealers have reported that the open market is now flush with dollars and will sell more than $100 million to the banks this week, while they sold $20m in the last two days of the previous week.
