The Pakistani rupee (PKR) maintained its upward trend against the US dollar for the third trading session in the interbank market on Tuesday as the PML-Ns ‘finance wizard’ and former Finance Minister Ishaq Dar returned home after a nearly five-year self-exile.
In the early trading session, the local unit appreciated 3.02 PKR against the greenback and was trading at 234 PKR in the interbank market, The News reported.
During the last three trading sessions, the dollar has depreciated by 5.71 PKR against the local unit.
Due to the recent decline in the value of the greenback, Pakistan’s total debt was reduced by 740 billion PKR.
The rupee came close to reaching a record low of 240 against the dollar but was unable to do so after several positive cues despite deadly floods devastating Pakistan’s economy.
Exchange Companies Association of Pakistan (ECAP) General Secretary Zafar Paracha said it seems like the market is responding to Dar’s arrival and the announcement of him replacing Miftah Ismail as the Finance Minister, The News reported.
Currency dealers said that the investors turned optimistic about the outlook for the rupee and the currency on the news of Dar’s return.
“Dar’s optimism helped exporters to sell the greenback in the market, leading to the rise in the rupee,” said a dealer.
Fahad Rauf, the head of research at Ismail Iqbal Securities attributed a fresh appreciation in the rupee to the sudden improvement in the market sentiment as people have memories of a stable rupee during the last Dar era, The News reported.
“The dollar is crushing global currencies, while our foreign exchange reserve position is far from comfortable. Thus, any sustainable rally in the rupee does not seem likely in the current scenario. The situation in global and Pakistan’s economy is not isolated, thus change of finance ministers would not do any magic.
“We need to keep taking tough economic measures to stabilise the economy,” Rauf added.
The expectations of dollar inflows from international lending institutions to support Pakistan’s relief and reconstruction efforts in the wake of the catastrophic floods that have hit the country and the decline in oil prices also helped to prevent the rupee from hitting a record low during the last week.
“Few developments over the weekend are helping stocks and PKR. Falling global oil prices, more pledges from international donors for floods and perception that Dar may be able to control economic issues,” said Mohammed Sohail, CEO at Topline Securities.
Analysts and the markets are looking at how Dar will step into the eye of the storm roiling Pakistan’s economy, The News reported.