Web Desk (LTN NEWS): On Tuesday, Ishaq Dar, came back to Pakistan after living in self-imposed exile for almost five years. This was the third day in a row that the rupee went up against the dollar on the interbank market.
In the early part of the trading day, the local unit gained Rs3.02 against the US dollar. At 10:30am, it was worth Rs234 on the interbank market.
In the last three trading days, the dollar has become worth 5.71 rupees less in terms of the local unit. Pakistan’s total debt went down by Rs740 billion because the value of the dollar recently went down.
Even though Pakistan’s economy was hurt by deadly floods, the rupee almost hit a record low of 240 per dollar. However, it didn’t because of a number of positive signs.
Zafar Paracha, the head of the Exchange Companies Association of Pakistan (ECAP), said that the market seems to be reacting to PML-N leader Ishaq Dar’s arrival and the news that he will replace Miftah Ismail as the finance minister.
Hopes are pinned on Ishaq Dar
Currency dealers said that when investors heard that Ishaq Dar was coming back to Pakistan, they became more hopeful about the rupee and the currency.
A dealer said, “Dar optimism helped exporters sell dollars on the market, which made the rupee go up.”
Fahad Rauf, the head of research at Ismail Iqbal Securities, said that the sudden improvement in the market’s mood was the reason why the rupee went up again. This is because people remember that the rupee was stable during the last Dar era.
“The dollar is crushing currencies around the world, and our foreign exchange reserves are not in a good place. So, it doesn’t look like the rupee will be able to keep going up in the near future. The world economy and Pakistan’s economy are not in a bubble, so changing the finance ministers won’t do anything magical,” Rauf said.
Rauf said, “To keep the economy stable, we need to keep taking tough economic steps.”
The rupee didn’t hit a record low last week because people thought that international lending institutions would send Pakistan dollars to help with relief and rebuilding efforts after the devastating floods that hit the country. The drop in oil prices also kept the rupee from hitting a record low.
“There wasn’t much good news over the weekend for stocks and PKR. Falling oil prices around the world, more promises from international donors to help with floods, and the idea that Dar might be able to handle economic problems, said Mohammed Sohail, CEO of Topline Securities.
Analysts and the markets are watching to see how Dar will handle the economic storm that is raging in Pakistan, since he is the main defender of keeping the currency at its current high value.
Mustafa Mustansir, the head of research at Taurus Securities, said, “Managing inflation and the rupee would be the biggest challenges for the new finance minister.” He added that the new finance minister would also have to negotiate any debt relief with the IMF and other multilateral creditors.
