The Pakistani rupee massively recovered against the US dollar in the open market during intraday trade owing to the crackdown initiated by the government against currency smugglers, hoarders and black marketers.
The greenback was trading below the Rs300 mark in the open market on Monday as the local currency recovered over Rs4 in a single day.
“The rupee has gained significantly in the open market in a week due to the government’s action against the smuggling of the currency in big cities,” said Arif Habib Limited Head of Research Tahir Abbas.
“This was a very important measure as our currency was continuously depreciating. It was also IMF’s [International Monetary Fund] demand to maintain a difference between the rupee-dollar exchange rate at 1.25%,” he added.
He said that further correction of up to Rs10-15 is expected in the coming days. The sale of dollars by exporters and the return of remittances to the interbank market, spurred by the narrowing gap between the official banking market and the kerb market, helped boost the rupee’s strength.
“We have had exporters selling dollars at large scale. They were offloading dollars that’s why the rupee strengthened in the interbank market. We expect the rupee’s upward trend to continue in days ahead,” a trader at a leading commercial bank said.
At the start of September, the rupee in the kerb market plunged to 333.7 against the dollar, widening the spread between the two currency markets to almost 9%, as opposed to the 1.25% target set by the IMF.
The difference between the open market and interbank exchange rates has now shrunk to 1.3%.
