Rupee recovers slightly on receipt of $3bn Saudi fund

KARACHI: In line with the market expectation, the Pakistani rupee recovered nearly 30 paisas on Monday after dropping to an all-time low of Rs176.77 as Pakistan received the much-awaited $3 billion funds from Saudi Arabia.

With an increase of 0.16%, the local unit closed at Rs176.48 against the US dollar, according to data released by the State Bank of Pakistan (SBP).

Earlier, analysts had predicted that the rupee would heave a sigh of relief this week as inflows from Saudi Arabia are set to give Pakistan’s foreign exchange reserves a much-needed lift.

A trader at one commercial bank had said: “Saudi Arabia has deposited $3 billion in the central bank account under its economic support package; it would boost reserves and ease pressure on the rupee in the near-term.”

“The timing of the Saudi financing is also important as the current account deficit for November seems to be much higher than expected amid a steeper rise in imports,” he added.

According to analysts, besides, October’s Real Effective Exchange Rate (REER) level indicates some improvement might be seen in the rupee going forward.

On Friday, Adviser to Prime Minister on Finance and Revenue Shaukat Tarin had said that REER should be no more than Rs166-167 per dollar and about Rs10 higher value was because of speculators and the role played by some banks.

“They should not do this,” he said, adding that he had shared data on such activities with the central bank governor who earlier did not believe the banks were involved in such profit-taking.

The rupee has maintained the downtrend for the past six months. It has lost 15.89% (or Rs24.21) to date, compared to the 22-month high of Rs152.27 recorded on May 14.

Cumulatively, the rupee has depreciated by 12.02% (or Rs18.94) since the start of the current fiscal year on July 1, 2021, data released by the central bank revealed.

Read more: Rupee appreciates around 0.27% against US dollar