Pakistani rupee hammers US dollar; shoots up by Rs2.65
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The rupee first shot up by nearly six rupees straight away as the dealers took positions for business but after a couple of hours the rupee was being traded at Rs225 up by Rs3.80 against the greenback. After the noon, there was again some activity which gave the rupee further strength and it appreciated by another rupee to Rs224 up by Rs4.80.
According to the forex dealers, the rupee gained Rs5.80 with minutes of the start of the business.
During the last four days of business, the rupee had overall gained Rs15.34.
The State Bank of Pakistan has recently taken a number of steps to check the money market. The SBP has fined several banks and suspended exchange companies branches for violating laws regarding foreign exchange.
1/2 #SBP increased monitoring of foreign exchange operations of Exchange Companies & Banks in view of recent volatility in exchange rate & started inspections and mystery shopping exercise to investigate customer's apprehensions. See PR: https://t.co/qIFXZe24co pic.twitter.com/Q0x2hAOSBP— SBP (@StateBank_Pak) August 3, 2022
2/2 #SBP suspended operations of four branches of two ECs for violation of SBP regulations and also imposed monetary penalties on some in the recent past. If needed, SBP would augment its enforcement actions in light of findings of on-going inspections and mystery shopping.— SBP (@StateBank_Pak) August 3, 2022
According to the analysts, rupee’s remarkable recovery is “primarily attributed to the improved economic fundamentals as the import bill in July 2022 has been reduced to $4.86 billion, down by 38.31 percent, compared to $7.88 billion in the previous month” and a green signal from the IMF regarding release of tranche for Pakistan.
Pakistan’s trade deficit is also reported to have reduced by almost half to $2.64 billion in July compared to $4.96 billion in June.
As reported, a significant reduction in the trade deficit has been achieved on the back of a cut in imports, resulting in less demand for the greenback in the local market.
According to the financial experts, the rupee’s recovery was due to a sharp drop in import payments after all letters of credit for oil in July were cleared and exporters rushed to close their open positions.
The market has shown confidence in the value of rupee as the IMF on Tuesday confirmed that Pakistan has completed the last prior action required for the Fund’s combined seventh and eighth review by raising the petroleum development levy (PDL).
In a statement, IMF resident representative in Islamabad, Esther Perez Ruiz said, “With the increase in PDL on July 31, the last prior action for the combined seventh and eighth review has been met. The [Executive Board] meeting is tentatively planned for late August once adequate financing assurances are confirmed.”
The government had on Sunday increased the rate of PDL on all products to meet an outstanding pre-condition of the IMF.
Reporter Ashraf Khan