Rupee is Recovering Against Dollar and May Hit Six Month Highest Soon!

The Pakistani rupee is on the road to recovery as it rose to its highest level in nearly five months against the US-Dollar on Thursday.

In the interbank market, the rupee strengthened by 62 paisas against the dollar to close at 162.86, compared with the previous closing of 163.48.

According to Capital Stake, the Pakistani Rupee recorded its highest of Rs. 162.8607/US$ since May 28th against the US Dollar. This is a recovery of 3.31% from its low of Rs. 168.4353 during the year.

A.A.H Soomro, managing director at Khadim Ali Shah Bukhari Securities told ProPakistani,

Currency markets keeps strengthening following improvement in USD globally. Falling oil prices are going to help also. Excessive appreciation may undo the meager growth seen in Exports. The value of Rs. 162-63 is just about right. The State Bank of Pakistan may buy USD from markets, now.

Yaqoob Abubakar from Tresmark, an application that tracks financial markets said that the rupee has gained steadily during the last month and has gained roughly a 2% Month on Month basis. Yesterday’s news about the rescheduling of $1.8 billion external debt servicing till June next year has further bolstered the direction, he added.

He further stated that the dealers are expecting that rupee will appreciate to 160/USD till the month-end.

Pakistan has received significant inflows in the form of remittances in the last couple of months. The measures taken by the State Bank of Pakistan (SBP) to encourage overseas Pakistanis to send money home through legal channels have started to show results.

At the same time, the demand for foreign currencies has fallen after the G20 deferred Pakistan’s debt payments. Moreover, G20 creditor countries further extended the debt suspension initiative for another six months.

The Pakistani Rupee has embraced a sudden wave of strength against the greenback since the 1st of October. The USD/PKR rate has consistently broken through support since the beginning of the month.

USD/PKR is now testing lower values than seen in late May. Also, the USD/PKR was trading near the 154.100 mark in early March before the implications of coronavirus hit the forex.

While there has certainly been a long term trend in which the Pakistani Rupee has lost value to the USD, if technical traders break down the value cycles of the USD/PKR, justifiable reasons can be made to consider pursuing the bearish momentum in the exchange rate, which has emerged since the 1st of October, according to Daily Forex.

The USD/PKR does not have a significant amount of trading volume and because of this, it is susceptible to rapid price surges, it added.

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