The Pakistani currency strengthened to over a 12-month high, closing just below the highly anticipated level of Rs280 against the US dollar in the interbank market on Thursday. According to data from the State Bank of Pakistan (SBP), the domestic currency appreciated by 0.04%, or Rs0.12, concluding at Rs279.98 against the greenback.
This surge follows the country’s recent report of a current account surplus reaching a six-month high at $397 million, indicating that the supply of foreign currency has exceeded demand within the nation. With this latest increase, the currency has cumulatively gained 9.68% or Rs27.12 over the past four-and-a-half months, compared to the all-time low of Rs307.10/$ recorded in the first week of September 2023.
According to the Exchange Companies Association of Pakistan (ECAP), the currency slightly decreased by Rs0.02 on a day-to-day basis, closing at Rs280.75/$ in the open market. The significant boost in foreign direct investment (FDI) across various sectors in December, coupled with increased export earnings—especially from the sale of IT goods and services in overseas markets—and a rise in remittances from overseas Pakistanis, contributed to the surplus in December. This has further supported the gradual upward rally of the domestic currency.
Despite earlier market expectations of the currency bouncing back beyond Rs280/$, the recent development suggests that the currency may continue its uptrend, considering the increased supply of the greenback compared to its demand, aiding the nation in countering imported inflation.
In other developments, the Oil and Gas Regulatory Authority (Ogra) announced a modest decrease in the weighted average sale price of Re-gasified Liquefied Natural Gas (RLNG) for end consumers. This decrease, up to 7.81%, is effective retrospectively from January 1, 2024, and is attributed to a decline in the DeSpace (DES) price. The reduced RLNG prices are expected to benefit consumers of SSGCL and Sui Northern Gas Pipeline Limited (SNGPL).
Published in The Express Tribune, January 19th, 2024.