Dollar unchanged in interbank, kerb markets

KARACHI: The exchange rate on Friday recorded no change from a day ago in both interbank and kerb markets.

Official data released by the State Bank of Pakistan (SBP) on Friday showed the dollar rate remained Rs278.80, flat from the preceding day’s closing level of Rs278.81. The exchange rate remained unchanged at Rs280 in the open market on a day-on-day basis.

Thanks to a multi-agency crackdown on the hoarding and smuggling of the dollar, the local currency gained strength against the greenback for 28 consecutive sessions. The dollar rate dropped from its high of a little over Rs307 on Sept 5 to Rs277 on Oct 17.

The month-long winning streak came to an end earlier this week when the rupee came under pressure in view of dollar payments.

For example, news reports said Pakistan made a six-month coupon or interest payment on its dollar-denominated Eurobond two days ago.

Tahir Abbas, head of research at Arif Habib Ltd, foresees the exchange rate’s consolidation in the Rs275-280 range going forward. The future direction of the exchange rate largely depends on the upcoming review of the loan programme by the International Monetary Fund (IMF) in November, which is a prerequisite for the disbursement of the next tranche necessary to maintain the country’s balance of payments.

A favourable review by the IMF will pave the way for foreign exchange inflows from other multilaterals.

In addition, upcoming data on export proceeds and overseas workers’ remittances will also help determine the exchange rate direction, he said.

The real effective exchange rate — an index that’s often used as a proxy for the strength of a currency relative to a basket of other currencies — for September clocked in at 91.72 versus 90.04 for August, according to a chart prepared by Mr Abbas’s brokerage.