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Rupee strengthens to 103.5 against US dollar

Rupee strengthens to 103.5 against US dollar

KARACHI: Pakistani rupee has gained value against the US dollar in both the inter-bank and open markets ending at 103.5 to the dollar indicating that the rupee is gaining faster than the market expectations which pushed investors to sell their holdings.

The selling volumes doubled in last two days in the open market. Currency dealers said the sellers got nervous as their holdings value started eroding. Dealers said that it was due to export receipts and inflows from other external sources. The reports of increase in the foreign exchange reserves, owing to export receipts and other external sources helped the rupee appreciate against the greenback.

“All indications suggest that the dollar will fall to Rs 102 soon and the local currency will bounce back to Rs 100 within a few months,” said Malik Bostan, the chairman of Exchange Companies Association of Pakistan (ECAP). The greenback lost Rs 2 in the open market and Rs 1.50 in the inter-bank market in the last two days.

The currency experts and dealers said the inflows would increase within a couple of months. The IMF’s second tranche of $ 550 million is expected by the end of this month or next month while the government is expected to launch Eurobond of $ 500 million next month.

“Market was flush with the dollars as buyers were not more than 5 per cent; 95 per cent were selling which has slashed the rate to six-month low,” said Anwar Jamal, a currency dealer and expert on currency movement.

Bankers said the inflows of remittances increased which may easily cross the figure of $ 15 billion by the end of this fiscal year. The central bank reported on Thursday that the country’s reserves increased to $ 8.7 billion while the holdings of the State Bank were $ 3.9 billion. The finance minister recently said the reserves would exceed $ 10 billion by end of this month.

The forex association has lifted the cap over restricted supply of dollars to the general public. ECAP has opened counters across the country to provide excess amount of dollars to all money changers who face shortage of the US currency.

Currency experts said that with higher exports under GSP Plus facility, more dollars are expected to come while the outflow would reduce particularly in the wake of small repayments to the IMF.

Rupee bounced back to Rs 103.50 from Rs 112 just a few months back. It may fall further.