Rupee makes significant recovery in open market

KARACHI, Sep 6 (SABAH): The Pakistani currency made another aggressive recovery of 2.5%, or Rs8, to Rs315 against the US dollar in the open market at around noon on Wednesday.

Amid the launch of a crackdown against foreign currency smugglers, the domestic currency has cumulatively regained Rs13 to date, according to currency dealers. In the inter-bank market, the bigger currency market where importers and exporters remain key traders, the currency remained largely stable at yesterday’s record low of Rs307 against the greenback during the day.

With the latest drop in the open market and stability in the inter-bank market, the difference in exchange rates between the two markets has narrowed down to Rs8 (or 2.6%) at present. This is still, however, one percent point higher compared to the IMF recommended level of 1.25% (around Rs4).

This suggests there is still a gap of around Rs4 to implement the IMF recommended level. The spread may be reduced by either the open market coming down or the inter-bank rate witnessing another increase. Ranged bound trade activities in the inter-bank market, however, suggest the currency would stabilise at around the current level of Rs307/$ these days.

In the market, the currency has cumulatively depreciated by slightly over 6%, or Rs18.5, to date since the caretaker government took over the reins of power in mid of August.