KARACHI – The Pakistani Rupee has continued to gain strength against US dollar as the intraday interbank rate reached Rs 84.0 per dollar, the lowest level since April 28, 2010. The rupee has so far appreciated by 1.8 percent in the current fiscal year, while it has beefed up by 2.7 percent since its recent low on September 30, 2010 (Rs 86.33 per dollar).
The prime reason for this appears to be the contained current account deficit, at $98 million in 8MFY11 compared to $3.0 billion last year. Higher exports receipts and increased inflow of remittances both notching up record monthly figures in March 2011, continue to offset the effect of rising imports.
Mustafa Bilwani at JS believes this appreciation is likely to be an added incentive to foreign investors – as they are likely to witness currency gains as well. This appreciation will also benefit in checking inflation, as energy forms a key component of the index and is largely dollar denominated. Furthermore, the opportunity cost of holding the greenback continues to rise as many banks now offer deposit rates as high as 13 percent in local currency.
