LAHORE - The victory of Pakistan Tehreek Insaf (PTI) has also conveyed a good message in the money market along with stock market as the value of Pakistani rupee has increased by more than Rs5 against US dollar just in a couple of days after the announcement of polls results.
The greenback crashed against local currency, dipping by more than five rupees in open market as in two days, the rate of dollar has reached Rs123.50 after dropping by Rs5.25.
The US dollar shown a downward trend and was recorded at Rs128 on Friday after decreasing by 23 paisa in interbank market.
It is observed that in the previous week before elections, the US dollar had hit extreme high rate and now it has started to fall gradually. Furthermore, it is expected that the US dollar will continue to drop even more with the creation of a new government. Experts said the stock market achieved 1650 points, resulting in the stability of local currency.
They said that elections brought stability to the exchange rate on the very first day after polls' results were announced in Pakistan.
During the two months of the caretaker government, the local currency hit the rock bottom against the dollar.
Forex Dealers Association chairman Malik Bostan said that the confidence of business community restored due to peaceful elections and expectations of possible PTI government in the country.
Moreover, he said that in a major development, China has also agreed to immediately give another $2 billion loan to Pakistan with a view to arrest the sliding foreign currency reserves and provide much-needed breathing space to the new government.
He said that over $1 billion has already been transferred to the SBP accounts this week, and would reflect in the reserves' data to be released on August 2. The amount will push SBP-held foreign currency reserves past $10 billion.
He said that the individuals involved in dollar hording also preferred to sell them. Money dealers said that at least five million dollars have been sold in open market during last three days and dollar can further decline against the rupee, he added.
Money changers said that speculators foresee that there is a little chance that dollar would climb to new highs in short term. A selling spree was witnessed at the money changers and there were no buyers and only sellers.
There were speculations that the new government would ask support from friendly countries, donor agencies and even financial institutions to bail out the economy from the present gloom.
It is to be noted that with a persistent decline in Pakistan's foreign currency reserves that were not enough to bear the cost of two months of imports, the rupee weakened to a record low of Rs130.35 to the US dollar in the open market during last one and a half month.
The SBP had let the rupee weaken by 20 percent in four rounds in the inter-bank market to help narrow down a widening current account deficit and save fast depleting foreign exchange reserves.
Moreover, external debt and liabilities has increased 76 percent to 10.6 trillion rupees ($92 billion) since June 2013, taking the ratio up to 31 percent of gross domestic product, the highest in almost six years. Pakistan's debt will continue to grow as it has the highest financing need as a percentage of GDP in emerging markets over the next two years, according to IMF projections.