Rupee recovers from record low due to suspected SBP intervention

Rupee holds steady at 178.04 against US dollar

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KARACHI: The rupee held steady against the dollar in the interbank market on Monday despite unmatched demand and supply of the US currency.

According to data released by the National Bank of Pakistan (SBP), the rupee closed at 178.04 against the US dollar, which was the same as the previous day’s close.

Earlier, analysts had predicted that the rupee may expand its decline in the coming days due to losses caused by importers’ payment demands and exporters’ slow inflow.

Driven by global commodity prices and strong domestic demand, imports have increased sharply, widening the trade deficit, and weakening the local currency.

A foreign exchange dealer said: “We anticipate the rupee to remain on the back foot next week, as a decline in the foreign exchange reserves due to rising imports and foreign debt-related outflows remains a drag on sentiment,” said a foreign exchange trader.

It seems that until the end of the month, the demand for hard currency from importers would continue, especially from the energy sector, which would impact the rupee.

“Inflows from exporters remain sluggish as they expect the rupee to depreciate more in the days ahead,” he added.

On Sunday, the central bank amended the regulations governing the sale of foreign exchange to individuals by exchange companies in order to enhance documentation and transparency and to further strengthen the foreign exchange regulatory regime.

“This step, which is in continuation of other measures being taken by SBP, is primarily to discourage speculative buying and selling of foreign exchange from the exchange companies without affecting the ability of the market to serve the genuine needs of the public,” the SBP said.

According to the new amendments, foreign exchange companies should ensure that no individual can purchase foreign exchange exceeding USD 10,000 per day and USD 100,000 per calendar year (or equivalent in other currencies) from all foreign exchange companies in the form of cash or remittance.

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