The dollar is selling at Rs162.8 in the interbank market after four and a half months. The last time the dollar traded below this level was on May 28.
Senior research analyst Karim Punjani says higher remittances, the money which overseas Pakistanis send back home, in September and deferring of loan repayments for another six months have played a role in the rupee strengthening against the dollar.
Punjani said people were expecting remittances to drop to $1.5 or $1.6 billion but they were reported at $2.3 billion for September, which he says is a good number. Remittances were reported at $7.1 billion for July to September.
Punjani added that debt repayment of $1.8 billion, which was deferred till December 2020 in response to the economic slowdown brought on by the coronavirus pandemic, has again been deferred for another six months till June 2021.
He added that people have also been attributing the strengthening of the rupee to Roshan Digital Accounts as they bring dollars into formal circulation by reducing the role of hawala and hundi, the informal and illegal system of sending money across the border.
But he thinks the $24 million received through the Roshan Digital Accounts so far was too low to affect the dollar rate.
He believes the present trend of the dollar rate dropping may be short-lived as the rupee will again come under pressure when the IMF programme resumes in January, which was suspended temporarily due to the coronavirus pandemic.
He added that pressure on the rupee would increase when Pakistan has to make debt repayments next year after June.