Pakistan’s rupee strengthens against US dollar

A day after registering its weakest level, Pakistan’s rupee recovered against the US dollar in the inter-bank market on Thursday.

As per the State Bank of Pakistan (SBP), the PKR closed at 170.87 against the USD, a day-on-day appreciation of 9 paisas or 0.05%. The PKR on Wednesday dropped to 170.96 against the greenback at the inter-bank, the lowest level in its history.

The gain, albeit marginal, comes a day after the SBP announced new rules to curb the dollar outflows to Afghanistan as the Pakistani currency continues to remain under pressure.

In a statement, the SBP said, “In order to enhance transparency in the foreign currency transactions by exchange companies and to curb the undesirable outflow of cash foreign currency, the SBP has introduced following regulatory measures: Persons traveling to Afghanistan will be allowed to carry only $1,000/- per person per visit with a maximum annual limit of $6,000; Exchange companies will be required to conduct biometric verification for all foreign currency sale transactions equivalent to $500/- and above and outward remittances. This requirement will be applicable with effect from October 22, 2021.

Furthermore, Exchange Companies will sell the cash foreign currency and make outward remittances, equivalent to $10,000/- and above, against receipt of funds through cheque or banking channels only.”

Former head of treasury Chase Manhattan Bank Asad Rizvi said that the central bank’s latest action might not be enough, and it may need to resort to taking fiscal measures now.

“The SBP, after imposing restrictions on car financing and then 100% cash margin on 114 items, has amended Exchange Companies Rules to have a better grip on the outflow of currencies. This may not be enough. It is time to take fiscal measures before all monetary tools get exhausted,” tweeted Rizvi.