After three straight days of ascent, the US dollar slid more than Rs2 in the interbank market on Wednesday morning.
According to the Forex Association of Pakistan (FAP), the greenback was trading at Rs199.40 around 9:50 am after losing Rs2.60 against the previous day’s close of Rs202. (The FAP’s closing rate from the previous session is lower than the official rate of Rs202.83 released by the State Bank of Pakistan).
The dollar’s sudden fall marks the end of a three-day winning streak that was largely attributed to pending oil payments and uncertainty over the resumption of International Monetary Fund’s $6 billion facility.
“Now that oil payments have been made, the pressure on rupee has significantly reduced,” FAP Chairperson Malik Bostan said.
Moreover, he said, the government has assured that it would be taking tough decisions in the upcoming budget to put a cap on imports and in turn, bring down the dollar’s value.
“It is expected that the federal cabinet will soon approve the ban on non-essential imports, which will result in a significant decline in imports,” he said. “The dollar has witnessed a decline today on account of these reports.”
Bostan linked the rupee’s recovery to the government and the State Bank of Pakistan dispelling reports of expected restrictions on foreign currency accounts.
“Following the dismissal of these reports, satta baz (speculator) who were manipulating the rupee’s decline have stopped doing so and as a result, the rupee has strengthened,” he explained.
Exchange Companies Association of Pakistan General Secretary Zafar Paracha also identified the rejection of reports about authorities intending to place restrictions on foreign currency account as a reason behind the rupee’s recovery.