Dollar Strengthens by 21 Paise in Interbank Market

On Tuesday, the US dollar saw a notable appreciation, rising by 21 paise to reach Rs279.57 against the Pakistani rupee in the interbank market.

This stability in the exchange rate has endured for more than two months, largely attributed to the supportive measures implemented by the State Bank of Pakistan (SBP), particularly in curbing imports.

While the apparent stability in the exchange rate may appear positive, currency experts caution that it reflects a deliberate strategy by the SBP to limit import activity, rather than indicating underlying economic strength.

Nevertheless, this stability has contributed to an enhanced inflow of export proceeds, thereby ensuring liquidity in the interbank market. Additionally, it has facilitated the SBP in maintaining its reserves at a desirable level, as it continues to purchase dollars from banks.

Currently, the SBP’s foreign exchange reserves stand slightly above $8 billion. Despite this, concerns have been raised by Fitch Ratings regarding the economy’s growth trajectory and the sustainability of exchange rate stability, particularly in light of the prevailing political uncertainty stemming from a split mandate in the recent general elections.

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