KARACHI: In the recent unprecedented statistics, the Pakistani rupee has appreciated by Rs1.47 against the US dollar in the outgoing week and closed at Rs159.11 in the interbank market on Friday.
In the open market, the local currency gained by Rs1.20 against the greenback with slight fluctuation in the whole week and settled at Rs159.50 on Friday.
Currency traders are of the view that the increasing inflows of remittance in connection with Eidul Fitr have supported the local rupee in the market. According to them, the majority of inflows came from Saudi Arabia and other Gulf countries, including the United Arab Emirates (UAE).
In the previous week, the Pakistani rupee has depreciated by 39 paisa against the US dollar in the outgoing week and closed at Rs160.58 on July 26.
In the earlier weeks, the rupee was observed to cumulatively depreciate against the greenback, which in turn had resulted in increased prices of goods and hardships for the general public.
The SBP has let the rupee depreciate significantly in the inter-bank market after finalising an agreement with the International Monetary Fund (IMF) for a loan programme on May 12.
The IMF has asked Pakistan to end state control of the rupee and let the currency move freely to find its equilibrium against the US dollar.
On the other hand, the World Bank Group has also supported the idea of leaving the rupee free from state control in an attempt to give much-needed boost to exports and fix a faltering economy.
In the previous weeks, the local currency has depreciated massively despite receiving the first tranche of $991.4 million from the International Monetary Fund (IMF).
The stringent conditions – on which the global moneylender has formally approved the bailout package of $6 billion for Pakistan – seem to have exerted more pressure on the local currency.
The gradual drop in the rupee had come due to high demand for the dollar against thin supply as the country continued to make aggressive international payments to partially pay off huge foreign debt and for imports.
Economists are of the view that effective measures must be implemented on the priority basis to recover the state from the balance of payment deficit.
Besides increased demand of the greenback in the local market, they have termed ‘balance of payments deficit’ as the main reason in the recent hike in the value of the US dollar.
Moreover, they consider that state’s exports and investment are required to grow significantly, and the imports must be reduced to remove pressure on the local currency.
According to experts, the government must ensure implementations on economic policies after the deal with the IMF.
It is anticipated that the US dollar rate would fluctuate for some time, and the value of the Pakistani rupee would stabilise after proper implementation of the economic policies.
The KSE-100 Index dropped by a significant 1.4 percent in the week as the Pakistan Stock Exchange (PSX) shredded 436 points and closed at 31,666 points, Dunya News reported on Saturday.
As a result of the downfall, investors have collectively lost about Rs120 billion. Foreign investors bought shares of $3.4 million.
According to analysts, the stringent policies, implemented following passage of the financial budget for the fiscal year 2019-20, are reflecting themselves in the downfall of the stock market. This is the fourth consecutive week when the index observed a significant drop.