The Pakistani currency made a strong seven-month high recovery of almost Re1 against the US dollar in a single day on Wednesday. The gain helped the currency hit over one-year high at Rs155.74 to the US dollar in the inter-bank market.

The rupee closed at Rs156.71 to a dollar on Tuesday, according to the State Bank of Pakistan (SBP).

The sharp growth in rupee was seen amid news reports that the government has hired an international bank to raise financing through launch of a new bond in world markets.

Earlier, the government had planned to raise $750 million to $1 billion through floating Eurobond to strengthen its foreign currency reserves and launch another bond worth $500 million to raise financing for power infrastructure projects in the country.

With a fresh gain of Rs0.97 on Wednesday, the rupee has recovered almost 7.53% or Rs12.69 in the past seven month to date since it hit an all-time low of Rs168.43 on August 26, 2020.

“The rupee may peak-out at around Rs155 to a US dollar,” Exchange Companies Association of Pakistan (ECAP) Secretary General Zafar Parach said while talking to The Express Tribune the other day.

The rupee, however, would not maintain at the low level around Rs155 for a longer period, as strong rupee would discourage exporters to book future export orders, he said.

Experts said that the ever growing inflows under the State Bank of Pakistan’s (SBP) initiative Roshan Digital Account (RDA) and strong remittances sent home by overseas Pakistanis have helped reserves stay stable at a 13-month high of around $13 billion for quite a long time.

The reserves have remained stable despite higher import payments, continued foreign debt (commercial loan) repayments and sluggish exports.

“Overall, the flow of foreign currencies has improved post Covid-19 pandemic,” said Pak-Kuwait Investment Company Head of Research Samiullah Tariq.

“The growing inflows under RDA are expected to hit $1.5 billion mark by December 2021…and keeps growing, going forward,” Tariq added.

Moreover, the receipt of workers’ remittances from overseas Pakistanis also remained strong above $2 billion for the ninth successive month in February. The overall remittances have surged significantly by 24% to $18.74 billion in the first eight-month (Jul-Feb) of FY21 compared to $15.10 billion in the same period of the last year.

Published in The Express Tribune, March 18th, 2021.

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