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Pakistani rupee jumps 5% against UAE dirham, likely to hit 70

Industry executives say that the rupee will remain volatile in the weeks ahead due to political uncertainty and lower foreign exchange reserves

Published: Tue 4 Jul 2023, 3:11 PM

Updated: Tue 4 Jul 2023, 3:18 PM

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Pakistani rupee jumped five per cent after the South Asian country secured a loan deal from the International Monetary Fund and it is expected that the rupee will strengthen further in the coming days.

However, industry executives say that the rupee will remain volatile in the weeks ahead due to political uncertainty and lower foreign exchange reserves.

Rupee appreciated nearly five per cent from 285.50 to 272 against the US dollar (77.73 to 74.05 against UAE dirham) on Tuesday.

On Friday, Pakistan secured a $3 billion short-term financial package from the IMF, giving its economy much-needed relief amid a balance-of-payments crisis. This led to a sharp appreciation in the rupee on Tuesday.

The total liquid foreign reserves of Pakistan stood at $9,340.8 million while reserves held by the central bank reached $4,069.9 million.

“The rupee has lost more than 20 per cent this year, so a five per cent appreciation is acceptable by the market,” said Rajiv Raipancholia, chief executive and managing director of Orient Exchange.

A LuLu Exchange spokesperson said Pakistan's rupee rose due to the expected appreciation of the currency in the interbank market as markets were shut for the Eid holidays last week and a bank holiday on Monday in Pakistan.

The spokesperson added that volatility is expected in the Pakistani rupee trading Tuesday.

“Going forward, the rupee is likely to remain volatile with positive bias amid expected IMF financial package dollar inflows in Pakistan. In the short term Pakistani rupee may trade in a range of 70 to 76 levels against dirham,” said LuLu Exchange spokesperson.

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