Pakistan’s currency stretched its winning run to a 27th straight session on Monday, though mounting concerns over a dollar shortage—driven by catastrophic floods—are casting doubt on how long the rally can last.
The rupee closed at 281.52 per dollar, a marginal improvement of just three paisa from the previous session. In the open market, the greenback was quoted at Rs. 282.35 for buying and Rs. 282.55 for selling, according to the Forex Association of Pakistan.
Floods Choking Foreign Exchange Flows
The historic floods, which have claimed more than 930 lives and displaced over four million people in the last two months, are now rippling into the financial system. Large swathes of banking infrastructure have been submerged, forcing some branches and exchange companies to shut down.
“The supply of greenbacks has dried up as branches and banks are underwater,” explained Saleem Amjad, CEO of Link International Exchange Co. Analysts warn that this sudden squeeze could reverse recent rupee gains if inflows remain choked.
Global Currencies Mixed Against Rupee
Other currencies traded in narrow ranges. The euro edged down by five paisa to Rs. 330.35, the Japanese yen was flat at Rs. 1.90, while the British pound strengthened, gaining 82 paisa to close at Rs. 382.39.
Gains Built on Fragile Ground
Despite the risks, the rupee has climbed about 1.2% since its July low, helped by tighter military oversight of the foreign exchange market, an S&P Global Ratings upgrade, and a trade agreement with the United States.
Still, analysts caution the rally rests on shaky ground. With reserves barely covering three months of imports and IMF loan conditions still looming, any prolonged disruption in dollar supplies—or renewed hoarding—could quickly stall the momentum.
