The dollar swiftly regained its strength, nearing Rs285 in Pakistan’s interbank market, following a recent climb after hitting its lowest in mid-October.

During the past 10 sessions, the greenback sustained its surge, gaining Rs7.7 or 2.8% due to decreased inflows alongside heightened demand from importers.

Currency experts attributed the rupee’s declining performance to several factors, particularly the shortage of dollars and reduced foreign investments from the Middle East post Israeli attacks on Gaza.

Despite ongoing positive talks with the IMF, experts foresee limited inflows even after the potential release of the second tranche under the $3 billion Stand-By Arrangement.

Concerns over recent domestic terrorism have added a layer of uncertainty to Pakistan’s economic and political environment, further impeding economic growth and stability.

Exporters view the dollar’s appreciation favorably for profits. However, they express concerns over the imported inflation caused by the stronger dollar, potentially impacting large-scale manufacturing and overall economic growth.

While the government initiated measures that previously reduced the dollar value from its peak at Rs307.10 on Sept 5 to Rs276.63 on Oct 16, recent fluctuations have shown a rise, causing a drop in export proceeds due to a crackdown on the forex market.

Faisal Mamsa, CEO of Tresmark, highlighted the volatility in USD/PKR, especially during IMF team visits, indicating restrictions on forex operations and a lack of dollar liquidity, resulting in wider spreads and increased forward premiums.

Anticipating a consolidation around Rs285, with occasional spikes to Rs288, Mr. Mamsa predicts the dollar’s potential recovery post an expected favorable evaluation from the IMF.