Rupee gains Rs. 35 against US Dollar in just five days

KARACHI: The gap between interbank and open market rates has significantly narrowed by approximately Rs. 35 this week.

On Monday, the rates stood at 337, but they have since decreased by up to Rs. 36, reaching as low as 301.

Throughout the week, there have been occasional spikes, with rates fluctuating between 302 and 307 on Friday.

Traders have observed a substantial influx of sellers looking to capitalize on the situation before the rupee-to-dollar rate stabilizes, expected to fall within the range of 294-302 by next week. However, lingering apprehensions persist, which could potentially drive the rupee below 310 once more.

The black market rate has nearly aligned with the official Bank rate, but a recent government crackdown has driven these underground operators further into hiding, leading to a scarcity of reported street rates. Smuggling channels have also ceased the transmission of buy/sell orders in an effort to evade the government’s enforcement actions, at least for the time being.

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Notably, the rupee has depreciated by nearly Rs. 83 since January 2023, and since April 2022, it has seen a staggering decline of over Rs. 130 against the US dollar. Based on today’s observed exchange rate movements, the PKR has gained approximately Rs. 1.9 against the dollar.

It is important to mention that this week, the State Bank of Pakistan (SBP) made the decision to implement structural reforms within the Exchange Companies sector. The minimum capital requirement for Exchange Companies has been raised from Rs. 200 million to Rs. 500 million. In addition, prominent banks actively involved in foreign exchange transactions will establish fully owned Exchange Companies to cater to the legitimate foreign exchange requirements of the general public.