After the currency touched almost eight months high at Rs158.91 against the US dollar in the interbank market on Monday, the Pakistani rupee became the third best-performing currency in Asia, experts said.
As Pakistan has become a net importer of wheat, sugar and cotton this year to boost supplies, growth will help tackle high inflation. currency Previously, the deficit in the supply of agricultural commodities caused their prices to increase in the region.
With Monday ‘s new recovery of Rs0.18, the rupee has cumulatively recovered Rs9.52 or 5.65 percent over the past 11 weeks after hitting the all-time low of Rs168.43 on August 26, 2013. On March 20, the rupee was last seen about the closing stage of Rs158.91 on Monday (November 9).
Improving currency parity could contribute to improving the country’s ability to pay its external debt, as well as tackling import inflation affecting the masses, he added.
Saad Hashmi, BMA Capital Executive Director, said the rupee could continue the upward momentum following the victory of Joe Biden in the US presidential election. “Biden aims to strengthen the US relationship with Iran; growth in the international market could drive down crude oil prices, as Iran is a big producer of oil,” he added.
Hashmi said Pakistan will benefit directly or indirectly from the policy shift because it is a net importer of crude oil and petroleum products. It meets more than 70% of the energy demand by imports, and the share of energy in total imports is about 25% per annum.
He said that, with higher dollar inflows into the national economy, the rupee had started to rise. “Dollar inflows have stayed strong owing to the reception of remittances from employees and export earnings,” he said.
Business talk about textile exporters means that they operate at maximum capacity. Their share of the nation’s overall exports stands at 60% per annum.
However, economists are wary of predicting the future of the rupee. If the world faces the second wave of Covid-19, the potential rupee-dollar parity will be influenced by Pfizer ‘s declaration of a promising Covid-19 vaccine and foreign oil prices.
The Pfizer vaccine could not be widely available before December, while any surge in foreign oil prices is likely to be a short-term occurrence, with Iran likely to return to the oil export market.
Pakistan is now likely to pay back $2 billion in loans to Saudi Arabia, $1 billion next week and $1 billion in January 2021.
The development could be neutral for the rupee given that Pakistan will arrange $2 billion from China and it has been learned that it is all set to launch Eurobonds and Sukuk worth $2 billion in February 2021.