KARACHI: The US dollar strengthened against the Pakistani rupee on Monday, gaining 32 paisas due to increased demand for imports and corporate payments. The exchange rate settled at Rs161.05 to the dollar in the interbank foreign exchange market, rising from last Friday’s closing of Rs160.73.
Currency dealers attributed the dollar’s gains to a surge in demand following the weekend. “Due to the weekly holidays, the market opened with higher demand for the dollar, particularly for import and corporate payments,” a currency dealer explained. This heightened demand placed upward pressure on the exchange rate, leading to the rupee’s depreciation against the greenback.
The market started the day on a strong note, reflecting optimism after the government’s decision not to impose a strict lockdown despite the potential for a second wave of COVID-19 infections. This decision was perceived positively by businesses, as it allowed economic activities to continue without significant disruptions. “The government’s approach to managing the pandemic while keeping economic activities open has been well-received by the market, contributing to a more stable trading environment,” said a financial analyst.
Despite the positive market sentiment, the demand for the US dollar remained robust throughout the trading session. Currency dealers noted that while there were inflows of export receipts and workers’ remittances, these were not sufficient to offset the higher demand for the dollar needed for import payments and corporate transactions. “Although export receipts and remittances have provided some support, the demand for dollars for imports and corporate payments has been significantly higher, driving the exchange rate up,” another currency dealer commented.
The ongoing demand for the dollar is largely driven by Pakistan’s import requirements, which include essential commodities and raw materials needed for various industries. Additionally, corporate payments for international transactions have also contributed to the increased demand for foreign currency. As a result, the rupee has faced some pressure, reflecting the complexities of managing a trade-dependent economy amid fluctuating global conditions.
Looking ahead, currency market participants are closely monitoring economic indicators and government policies that could influence the exchange rate. While the inflows from exports and remittances are expected to provide some cushion, the balance between dollar inflows and outflows will be a critical factor in determining the rupee’s future trajectory.
As the market continues to navigate these challenges, the rupee’s performance will remain a key focus for investors and businesses alike, with the exchange rate serving as a barometer of economic stability and resilience in these uncertain times.