After newly appointed finance minister Ishaq Dar issued a warning against manipulating Pakistani currency, the dollar further depreciated against the local currency on Thursday for the fifth session in a row. This led to the Pakistani rupee continuing its upward trend in the interbank market.
The dollar depreciated 2.5 in relation to the rupee and increased in value from yesterday’s close of 232.12 to close at Rs229.62 during intraday session.
Ishaq Dar, the finance minister, issued a warning that currency manipulation would not be permitted.
The return of Ishaq Dar, a close ally of PML-N supremo Nawaz Sharif, to Pakistan as the finance minister has reportedly helped improve confidence, and the decline in global commodity prices has also fueled the rupee’s gain, according to currency dealers and analysts.
Interbank closing #ExchangeRate for todayhttps://t.co/XH6wexDdfX pic.twitter.com/rlGIp3widP
— SBP (@StateBank_Pak) September 29, 2022
Fortunately, dropping international commodity prices and government administrative actions will likely keep the current account deficit under control. Inflation has also likely reached its high and will begin to decline in the following months.
Dr. Khaqan Hassan Najeeb, an economist and former consultant to the federal ministry of finance, stated in an interview that the first factor is a shift in market attitude brought on by a change in leadership at the finance ministry.
The former advisor claimed that “the new team is viewed to be more sensitive of rupee movement and so leaning toward more orderly movement.”
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Second, he pointed out that several fundamentals had improved, particularly the drop in oil and other important commodity prices, which may help to lower the volume of imports.
Thirdly, international lenders’ confirmation to prolong flood assistance is a market-supporting move, according to Dr. Najeeb.
Last but not least, Najeeb noted that although it may seem fanciful, the International Monetary Fund (IMF) might alter its stance and be more forgiving in some circumstances as a result of the impact of the floods.