ISLAMABAD: The Pakistani rupee made giant strides against the US dollar, and was up over 1.5% in the inter-bank market during the opening hours of trading on Monday.
At around 10:30am, the rupee was being quoted at 235.99, an appreciation of Rs3.66 or 1.6% against the greenback, during intra-day trading.
In the previous week, the rupee fared relatively better after the US Federal Reserve announced raising the key interest rate with the local currency ending 1.2% lower against the US dollar.
The rupee lost value in four of the five sessions, inching precariously close to its all-time low in the inter-bank market, before finally ending a 15-session losing streak to settle at 239.65 on Friday.
However, Monday’s gain comes on the back of a key political development.
Federal Minister for Finance and Revenue Miftah Ismail on Sunday announced he will tender his formal resignation, saying that he had verbally resigned in a party meeting held in London. Senior PML-N leader Ishaq Dar would replace Miftah as the new finance minister.
Dar is widely seen as advocate of a stronger rupee, and his elevation as finance minister tends to make markets bullish on the local currency, say experts.
Moreover, in another important development, the country’s central bank on Friday in order to further strengthen the regulatory regime for Exchange Companies (ECs) and promote the usage of banking channels, restricted ECs for cash sale transactions of $2000 and above.
As per the SBP’s new directives, ECs are now required to conduct all foreign currency sale transactions of $2,000 or above against PKRs through banking channels.
Meanwhile, internationally, the dollar maintained its strong grip against other currencies. The dollar index – whose basket includes sterling, the euro and the yen – reached 114.58 for the first time since May 2002 before easing to 113.73, 0.52% higher than the end of last week.
Oil prices, a key indicator of currency parity, fell for a second day on Monday on fears of lower fuel demand from an expected global recession sparked by rising worldwide interest rates and as a surging U.S. dollar limits the ability of non-dollar consumers to purchase crude.