The rupee is expected to continue its upward trend versus the US dollar as markets benefit from an increase in export profits and remittance inflows following the government’s crackdown on speculative behaviour, according to The News on Sunday.
The rupee strengthened and ended the day at 296.85/dollar on Friday after closing at 301.16/dollar on Monday.
The demand for dollars in the parallel or unofficial market decreased, which led to a 1.43% or Rs4.31 increase in the currency’s value against the dollar throughout the course of this week’s five sessions.
In an article published on Saturday, financial technology company Tresmark stated: “Liquidity has improved in the forex market as exporters were selling in both ready and forwards with good volumes and also due to uptick in daily remittances, and as a result the rupee will continue to strengthen gradually.”
Due to growth in all four categories—trade, services, primary income, and secondary income—the current account deficit, which measures the difference between foreign exchange inflows and outflows, decreased by 79% month over month to $160 million in August.
The regulatory mechanisms put in place to stop illicit activity in the foreign exchange market are starting to show progress. The difference between interbank and open market exchange rates has decreased as a result of this. As a result, the remittances have begun to increase.
Traders assert that tens of millions of dollars have returned to Pakistan’s interbank and open markets since the beginning of the raids on black market operators on September 6.
The rupee, which touched a record low on September 5, recovered to trade for less than $300/dollar last week after surging more than 10% from levels observed before the crackdown.
The removal of import restrictions, which raised the need for foreign money, put some pressure on the rupee as well. Its value against the dollar decreased by over 6% in August.