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Sunday, May 19, 2024

Rupee appreciates by Rs 4.43 against US dollar

The local currency, which recently hit a record low, appreciated by Rs 4.43 against the US dollar in the interbank market on Tuesday, January 31, 2023.

A few days back the rupee hit a record low against US Dollar at Rs 269.63, causing the highest exchange rate of all time. However, today the local currency was seen to appreciate at Rs 265.2 per US dollar in the interbank market. This development could be attributed to the remittances and export proceeds in the country.

The CEO of Alpha Beta Core, Khurram Shehzad said, “It appeared that remittances and export proceeds had started pouring in days after the government removed an unofficial cap on the USD-PKR exchange rate.”

He further added, “The International Monetary Fund (IMF) delegation’s arrival in the country for discussions on the ninth review may also have restored some confidence.”

Read more: IMF mission arrives in Pakistan for the 9th review

Earlier, the rupee had depreciated by Rs 24.54 in the interbank market on Thursday (January 26) after the government removed the price cap. This was the largest single-day devaluation in both absolute and percentage terms since 1999. The local currency depreciated by Rs 38.74 between Jan 26-30, causing record-high exchange rates. The government’s decision to remove the price cap was to end the artificial demand in the market. This was also one of the conditions set by the IMF for the revival of talks on the ninth review.

However, this further worsened the economic situation of the country which was already battling with external debts and rising inflation.  Furthermore, foreign reserves worth only $3.68 billion are left which are sufficient to cover imports of only two weeks.  Pakistan desperately needs the IMF to release the next $1bn tranche of its bailout program to head off a potential default.

Read more: Record High Exchange Rate of USD against Pak Rupee

Moreover, the IMF delegation has reached Pakistan today for its ninth review and will discuss technical issues for the first four days of the meeting. The second phase would include policy negotiation and finalizing the memorandum of economic and financial policies (MEFP).