On Friday, the Pakistani rupee saw a significant recovery after hitting an all-time low of Rs300 against the US dollar the previous day. The local currency gained Rs12.43 per US dollar in the interbank market to trade at Rs286.50.
This recovery can be attributed to two major developments that occurred over the last few hours. Firstly, the currency gained strength as demand from importers decreased, following the release of oil payments a day earlier.
Secondly, the Supreme Court declared the arrest of Imran Khan, the Chairman of the Pakistan Tehreek-e-Insaf (PTI), illegal and ordered his immediate release. These two developments, combined with an improved political situation, resulted in the sharp recovery of the rupee.
The demand for US dollars was high the previous day when the rupee hit an all-time low because imports had to retire their payments. However, the demand was relatively less on Friday, coupled with the improved political situation, which led to the sharp recovery.
Despite the uncertainties surrounding the International Monetary Fund (IMF) programme sparking default concerns, the currency market did not react negatively to Finance Minister Ishaq Dar’s press conference, where he claimed that Pakistan would not default even if there was no IMF programme.
