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Rupee continues to strengthen against dollar

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KARACHI:

The ongoing wave of rupee appreciation continued on Wednesday as the currency gained a fresh Rs0.57 to Rs169.97 to a dollar in the inter-bank market.

The rupee has recouped Rs5.3 since hitting the record low of Rs175.27 against the greenback on October 26, 2021.

Speaking to The Express Tribune, Ismail Iqbal Securities Head of Research Fahad Rauf highlighted that the prime reason behind the rupee’s rebound over the past few days was the $3 billion assistance announced by Saudi Arabia for Pakistan.

“Saudi Arabian aid played a significant role in arresting the rupee’s slide as it reversed the selling momentum in the foreign exchange market,” he said.

Besides, the real effective exchange rate (REER) – the country’s cost of trade with the world – fell to 93-94 when the rupee crossed the Rs175 mark against the greenback, he said, adding that the rupee was highly undervalued at that time, therefore, a correction was expected sooner or later.

He added that a slight improvement in exports did not have much impact on the rupee’s recovery.

“However, the exporters who were holding dollars while expecting the currency to weaken further, are now selling them, which is stabilising the local currency,” he said.

Endorsing his views, Intermarket Securities Head of Research Saad Ali pointed out that Saudi Arabian assistance worth $3 billion was aiding the rupee’s recovery. “At present, improved sentiment is driving the market,” he said.

Published in The Express Tribune, November 4th, 2021.

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