The Pakistani rupee appreciated by Rs0.17 to Rs278.33 against the US dollar in the inter-bank market on Friday, ending a three-day losing streak. This improvement is attributed to an increase in the supply of dollars in the domestic economy. According to the State Bank of Pakistan, the currency recovered from Thursday’s closing level of Rs278.50, which was a two-and-a-half-month low.
Over the past nine months, the rupee has gained 10.33% or Rs28.77, recovering from a record low of Rs307.10 per dollar in early September 2023. This recovery is largely due to foreign investors injecting new capital into rupee-based government debt securities, such as treasury bills, in May 2024, boosting the supply of foreign currency. The outlook suggests that the flow of foreign investment into local bonds will further increase after the government secures a new IMF loan programme in June-July 2024.
Additionally, the partial recovery of the rupee aligns with reports of upcoming Chinese investment. The government has approved new projects worth $2 billion under the China-Pakistan Economic Corridor (CPEC) ahead of Prime Minister Shehbaz Sharif’s visit to Beijing. Moreover, the government announced plans to launch a Panda bond in the Chinese market to raise between $300 million and $500 million.
Despite a slight drop in foreign exchange reserves, the currency market remained stable. The Exchange Companies Association of Pakistan reported that the local currency held steady at Rs279.49 per dollar in the open market.
