The upward trajectory of the rupee continued for a second day on Thursday as it extended its gains against the dollar in both the interbank and open market.
In the interbank market, the greenback was being sold at Rs304.50 by 10:30am, Rs2.48 lower than yesterday’s close of Rs306.98, according to the Forex Association of Pakistan (FAP).
In the open market, the dollar was selling for Rs307 in the open market — down by Rs5 from the previous day’s Rs312 by 12:45pm.
Mettis Global Director Saad Bin Naseer said that the “upside movement in the kerb market appeared to be primarily driven by speculative activity, and the interbank market was following same”.
“After implementing measures to control the kerb market and initiating operations against those responsible for this move, the market has become calmer in the interbank sector,” he told Dawn.com.
“This suggests that sentiment is the main driving force behind these market dynamics,” he said, expressing the hope that remittances would also start coming through legal channels.
“If government action continues […] the demand for physical dollars will reduce, and the supply from the open market to the interbank will increase, which will strengthen the PKR in the following days,” he said.
A day earlier, a crackdown on the informal currency market had started to help the gap between the interbank and open market rates edge closer to the International Monetary Fund’s (IMF) target of 1.25 per cent.
The State Bank of Pakistan had also stepped up supervision of the foreign exchange market, ordering banks to set up separate entities to conduct forex transactions and extending a clampdown on hard-currency hoarders and smugglers.
“Following the crackdown, illicit currency dealers are now in the shadows. The open market has stabilised, even though trading volumes have diminished,” Malik Bostan, FAP president had said.
Bostan had denied reports that law enforcement officials were deployed at exchange companies to monitor operations.
However, inside sources from the financial sector had indicated that authorities have tightened their grip on exchange companies, relentlessly pursuing illegal currency merchants across the country.
Additional reporting Shahid Iqbal
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