Pakistani rupee strengthens to 6-month high

Dubai - The Asian currency has recovered 5.03 per cent of its value from August’s low of 168.43 versus the US dollar

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A trader counts Pakistani rupee notes at a currency exchange booth in Peshawar.

By Waheed Abbas

Published: Tue 3 Nov 2020, 5:05 PM

The Pakistani rupee climbed to six-month high on Tuesday and closed below 160 against the US dollar for the first time since May 8, 2020 as the economic indicators showed positive trends.

The Asian currency has recovered 5.03 per cent of its value from August’s low of 168.43 versus the US dollar (45.9 against the dirham).

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It closed at 159.96 against the greenback (43.5 versus the dirham) on Tuesday. It has gained 5.41 rupees or 3.5 per cent year-to-date, according to Capital Stake.

The rupee ended last week at 160.2578 against the previous week close of 161.3698, gaining 0.689 per cent last week.

Remittances surge

The surge in rupee’s value is attributed to increase in shift of remittances flow from informal to formal channels after Islamabad clamped down on illegal money transfer channels. Pakistan recorded an all-time high $23.12 billion (Dh84.85 billion) remittances during the financial year 2019-20, an increase of 6.4 per cent. Pakistan remittances would grow at about nine per cent, totaling about $24 billion in 2020, World Bank said in its latest report.

It said there was a sharp increase in remittances since Covid-19, mostly from the GCC countries, particularly from Saudi Arabia. Arguably this spike in remittances could be at least partially attributed to the ‘Haj effect’ where Pakistani migrants remitting home the money saved for pilgrimage to Makkah due to a sharp reduction in the number of Haj visas to contain the pandemic.

Antony Jos, director of Joyalukkas Exchange, said looking at the first three months of 2020, outward remittances by expats rose 7.8 per cent year-on-year, but there was a drop of 7.7 per cent in the second quarter.

“Overall, the outbound remittances have slipped down to Dh79.6 billion compared with Dh80.96 billion in the previous year, according to the Central Bank of the UAE. This is possibly due to the Covid-19 crisis impacting migrant workers that has resulted in salary cuts and job losses.

“We expect a positive outlook as UAE’s economic activity has strengthened from June and lockdown measures have eased. Moreover, a Covid-19 vaccine and mass global distribution will be essential for a meaningful recovery in key UAE sectors such as aviation and tourism,” said Jos.

— waheedabbas@khaleejtimes.com

Waheed Abbas

Published: Tue 3 Nov 2020, 5:05 PM

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