Karachi: On Wednesday, in the interbank market, the Pakistani rupee reached a new one-month high of Rs223.94 against the US dollar, increasing by a further 0.76% (or Rs1.70) for the ninth straight working day.
The local currency has sustained its gains against the US dollar as exporters have kept selling dollars on forward exchanges to protect themselves from significant losses should the rupee appreciate below Rs200 in the upcoming days and weeks. Ishaq Dar, the finance minister, judged the rupee to be undervalued and claimed that its real value is less than Rs200.
Despite an ongoing investigation against eight banks who are reportedly involved in manipulating the rupee to record lows of approximately Rs240, the currency has continued to rise. Around that time, in July 2022, the currency experienced its all-time low.
Later, the rupee experienced a brief upturn before falling again. As a result, it dropped another 12% (or Rs. 25) during the course of 15 straight working days, almost reaching the record-low low set in July in September.
The unexpected aspect of the current rupee surge is that it has persisted in strengthening against the US dollar while nearly all other major global currencies, including the euro and British pound, are depreciating against the dollar.
The rupee has continued to rise despite an important reduction in fuel production of 1.1 million barrels per day by OPEC and non-OPEC oil producing and exporting nations, as well as a rebound in global oil prices to above $90 per barrel.
Thirdly, despite receiving a $1 billion loan tranche from the International Monetary Fund (IMF) a month ago, the nation’s foreign exchange reserves have kept falling to dangerously low levels.
Exports from the nation decreased nominally by 1% in September. More importantly, the textile industry, which accounts for the majority of exports, has begun to report partial closures due to a lack of high-quality cotton after flash floods significantly reduced the amount of the crop in the fields.
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