Rupee unable to maintain recovery against dollar

Rupee unable to maintain recovery against dollar

KARACHI: The Pakistani Rupee, which initially made gains against the US Dollar in early trading on Monday, faced a setback as demand surged for import and corporate payments.

The rupee had initially strengthened by 51 paisas against the dollar in the early trade in the interbank foreign exchange market. This initial surge was attributed to positive sentiments following the signing of $20 billion investment agreements between Pakistan and Saudi Arabia.

However, the gains were short-lived, as the rupee ultimately gained only 11 paisas to close at Rs138.72 to the dollar, slightly down from last Friday’s close of Rs138.83 in the interbank foreign exchange market. The trading day in the interbank foreign exchange market saw an initial range of Rs138.25 to Rs138.75, with the market recording a day high of Rs138.75 and a low of Rs138.35, ultimately closing at Rs138.72.

Despite the minor decline in the interbank market, the rupee managed to make gains of 40 paisas against the dollar in the open market. The buying and selling rates for the dollar in the open market were recorded at Rs138.20/Rs138.70, compared to the last Saturday’s closing of Rs138.60/Rs139.10 in the cash ready market.

The fluctuations in the exchange rate can be attributed to various factors, including market dynamics, demand and supply forces, and external economic conditions. The early gains in the rupee were likely influenced by positive sentiments generated by the significant investment agreements between Pakistan and Saudi Arabia.

The recent two-day visit of the Saudi Crown Prince resulted in the signing of investment agreements worth $20 billion, contributing to improved investor confidence. However, the subsequent decline in the rupee suggests that demand for import and corporate payments played a significant role in influencing the currency’s value.

The interplay of these factors highlights the dynamic nature of currency markets, where various forces come into play, impacting the value of currencies. The central bank and economic policymakers will closely monitor these fluctuations to assess their implications for the economy and take measures as needed to ensure stability.

The overall economic environment, global market conditions, and geopolitical factors continue to influence the exchange rate, and market participants will remain vigilant to changing dynamics. The response of the Pakistani Rupee to both domestic and international events underscores the need for prudent economic management and the implementation of policies that foster stability and sustainable economic growth. As Pakistan navigates these economic challenges, the resilience of its currency will be a key indicator of the country’s economic health and its ability to attract and retain foreign investment.