KARACHI: The Pakistani rupee strengthened against the US dollar in the inter-bank market on Friday.
According to data released by the State Bank of Pakistan (SBP), the local currency appreciated around 0.11% to close at Rs165.62, after having closed at 165.81 on Thursday. It has depreciated nearly 5% since June 2021.
Speaking to a private news channel, Pak-Kuwait Investment Company Head of Research Samiullah Tariq said: “As the country has moved towards a flexible exchange rate, the government does not use official flows to defend the exchange rate parity.”
Shedding light on the phenomenon of rupee-dollar parity, the analyst said that the exchange rate is determined by the demand and supply of dollars “which in our case are imports against exports plus remittances”.
Pakistan received $2.7 billion on Tuesday from the International Monetary Fund (IMF) under its Special Drawing Rights (SDR) allocation to fight COVID-19.
Tariq said this is the reason why even when the country received euro bond inflows last month and IMF inflows this week, the local currency continued to depreciate.
Despite significant inflows, the foreign exchange reserves held by SBP declined 0.3% on a week-on-week basis. According to official data, on August 20, the foreign currency reserves were recorded at $17,578.9 million, down $47 million compared with $17,625.9 million on August 13.
The central bank cited debt repayments as the reason behind the outflows.
Earlier, on Wednesday, the currency depreciated by Rs1.07 or 0.65% against the greenback to close at Rs166.27 in the inter-bank market.