Pakistani rupee strengthens to two-month high against US dollar.

The Pakistani rupee continued its impressive rally on the eighteenth consecutive working day, surging to a two-month high against the US dollar in the interbank market. According to data from the State Bank of Pakistan (SBP), the rupee strengthened by 0.34%, or Rs0.98, to close at an impressive Rs286.76 against the greenback.

This remarkable rally has seen the rupee gain a cumulative 7%, equivalent to Rs20.34, over the past 18 days. In the open market, the local currency saw a 0.52% increase of Rs1.50, closing at Rs286.50 against the US dollar.

The sustained appreciation of the rupee can be attributed to an increased supply of the US dollar, supported by a recent uptick in export earnings and a significant decrease in import payments. Data from Topline Research indicates that the Pakistani rupee continues to outperform most other world currencies on a daily basis.

Recent reports also suggest that export earnings and official channels for workers' remittances have improved compared to the period before the government's crackdown on currency smuggling. In fact, there are discussions in the market that black markets are offering the US dollar at a lower price (in terms of rupee value) compared to the official markets.

While a treasury firm projected the rupee would stabilise around Rs285/$ in the current cycle of appreciation in the interbank market, the prolonged crackdown on currency smuggling may extend the rupee's rally beyond this level. However, it's essential to monitor this situation closely, as excessive appreciation could have implications for imports and exports.

Meanwhile, official currency markets have seemingly brushed off a slight dip in the country's foreign exchange reserves, held by the SBP, due to foreign debt repayments last week. This downturn follows a brief uptick in the previous week, indicating a complex interplay of factors affecting the Pakistani rupee's exchange rate.