ISLAMABAD: The Pakistani rupee kept rising against the US dollar in the open market Thursday and was trading at 312 as the difference with the interbank rate continued to decrease.
Dealers reported that, compared to Wednesday’s levels, the rupee was quoted at 312 for selling and 309 for buying for consumers in the open market. The rupee strengthened against the dollar on the interbank market as well.
A dealer states, “Market expects rates may fall even further amid the State Bank of Pakistan’s (SBP) latest measures.”
On Wednesday, the Exchange Companies (ECs) sector underwent structural modifications from the central bank. According to the SBP, “As part of these changes, prominent banks actively engaged in the foreign exchange business would create wholly-owned Exchange Companies (EC) to serve legitimate foreign exchange needs of the general people.
The central bank also disclosed the merger and transformation of numerous current Exchange Companies into a single category of Exchange Companies with a clear mandate. The minimum capital requirement for EC was also increased by the SBP from Rs.200 million to Rs.500 million, increasing the entry hurdle for the private sector.
The recent developments follow a meeting between the Chief of Army Staff (COAS), Asim Munir, and business community members. During this meeting, the army chief discussed the government’s economic strategies and efforts to combat smuggling and speculative activities in the country’s financial landscape.
Furthermore, law enforcement personnel were deployed to oversee dollar trading activities at exchange companies on Tuesday.
Pakistan is currently operating under an International Monetary Fund (IMF) program. As outlined in the IMF’s country report on Pakistan after the approval of the Stand-By Arrangement by the Executive Board, it is essential to maintain a narrow exchange rate gap between the inter-bank and open markets. This gap, referred to as the “premium” by the IMF, should ideally remain around 1.25%.
It’s worth noting that concerns over Pakistan’s increasing imports as restrictions relax, an expanding current account deficit, and declining foreign exchange reserves all contributed to further pressure on the rupee.
