Karachi: After the central bank cut interest rates aggressively by 2.5 percentage points, the Pakistani rupee fell by Rs0.09 to settle at Rs277.79 versus the US dollar on Monday’s interbank market. It was due to predictions of increased dollar demand.
Since the policy rate cut was more drastic than the financial market had predicted—by two percentage points—the rupee’s value may continue to fall on the foreign currency market in the days ahead. Following the closure of the capital markets, the State Bank of Pakistan (SBP) declared its rate reduction.
According to SBP data, the rupee gained Rs0.15 to settle at Rs277.70 per dollar on Friday, but this most recent dip has primarily reversed those gains.
The local currency closed at Rs278.71 against the dollar on Monday, down Rs0.08 from Rs278.63 on Friday, according to the Exchange Companies Association of Pakistan (ECAP), which tracks the open market.
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The SBP indicated in its most recent monetary policy that imports of machinery and raw materials are steadily rising, pointing to further liberalization of imports in the fiscal year 2024–2025.
Nonetheless, a recovery in the rupee remains possible. SBP Governor Jameel Ahmad indicated the country is expected to receive $500 million in fresh financing from the Asian Development Bank (ADB) next week. Inflows from workers’ remittances sent home by overseas Pakistanis are also projected to exceed the average monthly receipts of $3 billion in October 2024.
After a 0.3% increase during the first four months, a local research firm predicted on Saturday that the rupee will stay steady between Rs277 and Rs282 per dollar till the end of fiscal year 2024–25.