Rupee makes recovery against USD, appreciates by 5%

KARACHI, May 12: The Pakistani rupee dramatically recovered 5%, or Rs15, to the pre-political crisis rate of Rs284 against the US dollar in the interbank market on Friday.

Yesterday, the currency had nosedived to an all-time low at Rs299 against the greenback. The rupee had slumped by around 4%, or Rs14 in the past two days in the wake of political turmoil following the arrest of former prime minister Imran Khan.

Taurus Securities Director Research Mustafa Mustansir said the improvement in the political situation in the country improved business sentiment in the interbank market.

The turnaround in the situation extended support to the rupee against the greenback.

Finance Minister Ishaq Dar’s statement that the government had arranged financing to pay off foreign debt on time in June and that the country would not default without the IMF tranche also supported the rupee, added Mustansir.

However, he cautioned that the finance minister’s statement may deteriorate the balance of payment crisis if the IMF program continued to face delays.

The analyst further said that the supply of dollars has improved in the interbank market against demand and the development also supported the rupee to stage the massive recovery in intraday trading.

Pakistan is facing a situation similar to default, as it has to repay $3.7 billion by the end of June. On the other hand, foreign exchange reserves have dropped to a critically low level at around $4 billion.

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