KARACHI: The Pakistani Rupee exhibited noteworthy gains against the US Dollar in early trade on Tuesday, attributed to the shrinking current account deficit and increased foreign assistance inflows, according to market dealers.
The rupee experienced a rise of 10 paisas in the early trading hours within the interbank foreign exchange market, positioning the dollar at Rs138.65. This marks a positive shift from the previous day’s closing rate of Rs138.75.
Financial experts believe that the recent surge in the value of the rupee is multifaceted. The narrowing current account deficit, coupled with the influx of foreign assistance, has bolstered confidence in the Pakistani currency. The lower demand for imports has played a pivotal role in strengthening the rupee, as it eases pressure on the country’s foreign exchange reserves.
The recent proposals for duties and taxes, specifically aimed at discouraging luxury imports, have also contributed to the rupee’s upward trajectory. The Finance Supplementary (Second Amendment) Bill of 2019, which is currently under consideration, includes provisions for the verification of foreign remittances through banking channels for the clearance of imported vehicles. This initiative has acted as a deterrent for unnecessary dollar purchases, as importers exercise caution in light of potential policy changes.
Currency analysts suggest that the Finance Supplementary Bill has created an atmosphere of prudence among importers, prompting them to be circumspect in their approach to purchasing dollars until the bill is passed in parliament. This cautious sentiment is expected to persist until there is clarity on the regulations and procedures outlined in the proposed bill.
The overall impact of these developments has been a positive one for the Pakistani Rupee, which is now showing resilience against external economic pressures. The government’s efforts to curb luxury imports and streamline foreign remittances are seen as proactive measures to stabilize the economy and enhance the country’s financial standing.
While the strengthening of the rupee is a positive sign, financial experts emphasize the importance of sustained economic reforms and prudent fiscal policies to ensure long-term stability. The government’s commitment to addressing current account deficits and implementing measures to regulate imports and foreign remittances is seen as a step in the right direction.
As the Finance Supplementary Bill undergoes parliamentary scrutiny, market participants will keenly observe its impact on the currency market and the broader economy. The evolving economic landscape of Pakistan underscores the necessity for adaptive and strategic measures to maintain the positive momentum in the financial markets.
