In the interbank market on Monday, the US dollar dropped further Rs1.75 to settle at Rs182.93, indicating that the political situation is improving.
When the US currency plummeted to Rs184.68 from Rs188.18 on Friday, the rupee had its highest ever recovery of Rs3.50 against the dollar.
The Supreme Court’s decision, which made a no-confidence vote against then-Prime Minister Imran Khan inevitable on Saturday, helped defuse speculative forces profiting from the situation in Islamabad.
The rupee gained Rs5.20 or 2.8 percent against the greenback in the last two days, easing pressure on the currency rate. The rupee has been declining on a daily basis since the beginning of March, while the political turmoil in Pakistan gave speculative forces room to operate with large profit margins.
Bankers and currency traders are unsure of the precise exchange rate that will apply until the following fiscal year, but they believe it will reflect the economy’s performance in the coming months under the new administration.
“So far the situation has not changed. The pressure of demand for dollars is already there but the only thing that is absent is the uncertainty about the existence of government,” said Atif Ahmed, a currency dealer in the interbank market.
According to bankers, despite the political crises’ uncertainty, remittance inflows were unaffected. Inflows may be roughly the same in March as they were in February.
Foreign investors’ hot money has been invested in domestic bonds, but the uncertainty has affected them. During the last six months, more than $300 million has been taken out of Treasury bills and Pakistan Investment Bonds.