Pakistani Rupee Becomes 3rd Best Performing Currency in Asia

Pakistani Rupee has become the third best-performing currency in Asia after it continued its unhindered climb against the US Dollar on Monday, closing the day in the interbank market at 158.91. Pakistani Rupee also hit an 8-month high against the US Dollar yesterday.

According to Alpha Beta Core, an investment banking and corporate finance and technology advisory platform, since 1st October, the Pakistani Rupee has appreciated 3.1% against the US Dollar.

The Pakistani rupee has strengthened due to a higher inflow of dollars into the economy on account of remittances and export earnings since 1 October.

Besides Pakistani rupee, Indonesian Rupiah, after regaining 4.5% against the US Dollar, and South Korean Won, after regaining 3.6% against the US Dollar, since 1 October are the top two best performing Asian currencies.

CEO Alpha Beta Core, Khurram Shehzad, has said that the improvement in rupee-dollar parity will reduce pressure on the external debt as well as imported inflation in the country.

Shehzad added that exports should not be hurt in the short run as the country’s export capacity, as per reports, is already operating at 100%-120%, while REER index (measuring competitiveness through relative currency parity) also has room for further improvement in Rupee-Dollar parity.

While commenting on the Rupee-Dollar parity, A.A.H Soomro, Managing Director at Khadim Ali Shah Bukhari Securities, said “Dollar inflows are above-expectations. Expect another good show in remittances and the current account. With low oil prices, investors are de-dollarizing the savings. Expect further FX reserves once IMF [International Monetary Fund] tranche is cleared. A few milestones before that.”

The local currency is gaining due to a slowdown in importers’ demand for USD, while healthy inflows from remittances and export proceeds also boosted the value of the Rupee. On the other hand, exports are stable and improving.

 

Soomro added that Rupee’s improvement against the Dollar can be said to be the result of the inflow of remittances in USD. State Bank of Pakistan’s (SBP) measures to encourage overseas investment in the country is another contributing factor.

Improvement in exports, primarily led by the textile sector and partially assisted by the early lifting of lockdown restrictions, has also played its part in strengthening the Rupee against the Dollar.

According to the data released by the SBP, the foreign currency reserves held by the central bank on October 29 were recorded at $12,182.6 million, which is up by $61 million as compared with $12,121.5 million in the previous week.

 

Source : Propakistani