In the interbank market, the Pakistani rupee continued to advance versus the US dollar, gaining roughly 0.2% in the first hours of trading on Wednesday.
During intra-day trade, the rupee appreciated by Re0.34 or 0.16% to 217.45 at roughly 10:40 a.m., or 0.16% against the US dollar.
For the 13th session in a row, the rupee appreciated against the US dollar on Tuesday. It closed at 217.79, up Re0.18 (0.08%).
The recent increase in the value of the rupee is linked to a change in sentiment and the central bank’s operations against participants in currency speculation.
According to Fahad Rauf, Head of Research at Ismail Iqbal Securities, the first increase in the value of the rupee was caused by a shift in market sentiment following the appointment of Ishaq Dar to the position of Minister of Finance.
“However, since then, a lot of significant events have also happened, pushing the value of the rupee. Remittances started to flow through authorised channels again. Additionally, exporters are also releasing their proceeds as a result of the shift in sentiment because the market was anticipating a decline in the rate, he added.
Rauf continued by saying that the slowdown in the economy had also reduced the strain from import payments.
In a significant move, the International Monetary Fund (IMF) estimated Pakistan’s GDP growth rate at 3.5% for 2023 compared to 6% in 2022; however, this projection excludes the effect of the most recent floods.
According to the IMF’s World Economic Outlook (WEO) report, which was titled “World Economic Outlook Countering the Cost-of-Living Crisis,” the inflation rate is expected to be 19.9% in 2023 compared to 12.1% in 2022. However, the analysis predicts that consumer prices will increase by 15% by the end of 2023, compared to 21.3% in 2022.
On Wednesday, as traders prepared for US inflation data and its implications for future Federal Reserve rate hikes, the dollar reached new 24-year highs internationally.
The US dollar index, which compares the dollar to a basket of six important rival currencies such as the yen, sterling, and the euro, increased 0.08% to 113.43 after earlier reaching its highest level since September 29 at 113.59.
On Wednesday, investors were preparing for U.S. inflation data as oil prices, a major indicator of currency parity, fell for a third consecutive day as the dollar strengthened and global recession threats and tightening COVID-19 limitations in China raised concerns about fuel demand.
