Rupee hits highest level against dollar in FY21.

Byline: Shahid Iqbal

KARACHI -- The 73-paisa gain on Wednesday tossed the rupee to its highest level during the current fiscal year against the US dollar at Rs157.12 in the interbank market.

The local currency has so far recovered 6.8 per cent in 2020-21 against the greenback on the back of higher inflows and slow demand for US dollars.

The rupee closed at Rs157.12 in interbank market from Rs157.85 on Tuesday. The dollar price recorded a fall of Rs2.97, or 1.8pc, during the last 30 days.

'Not sure how far the dollar will continue to fall but some macro indicators are in support of local currency,' said Atif Ahmd, a currency dealer in the interbank market.

Currency dealers said the demand for dollars was low while the inflows into the banking system have increased significantly which strengthened the rupee.

The exchange rate uncertainty has been a persistent problem for trade and industry particularly exporters and importers. However, the State Bank of Pakistan (SBP) now maintains that the exchange rate is free of any influence and is market-based.

The SBP governor said a number of times that the central bank has succeeded in bringing stability in the exchange rate due to market-based mechanism.

Since the beginning of FY21, the exchange rate came under immense pressure as the dollar rate touched an all-time high of Rs168.8 on Aug 15, 2020.

However, the dollar rate started easing from September 2020 and had gradually been losing its value against the rupee since then.

The Covid-19 related slowdown did have its impact on the economy, but exporters had succeeded to grab more orders compared to the preceding fiscal year which improved the overall inflow with high export proceeds during ongoing fiscal year.

'We could not expect that inflows through the Roshan Digital Account (RDA) would pick pace so quickly as...