Is the rupee’s recovery temporary?

After hitting an all-time low of 239.71 to a US dollar on September 22, the Pak rupee has since made a handsome gain of 8.25 per cent. It closed at 219.92 per dollar on October 7. Whether Finance Minister Ishaq Dar can bring the exchange rate to Rs200 per US dollar, as he has repeatedly claimed, broadly depends on two things: how the US dollar fares against major foreign currencies and how quickly our external sector indicators improve. The US dollar looks set to remain strong and may even get stronger vis-a-vis the world’s major currencies. There is hope for improvement in the external economy. But it is too optimistic to expect that enough progress will occur within this fiscal year. So, we should not hope for a “sustainable and huge” appreciation in the rupee’s current value during this quarter or in the next two quarters of this fiscal year.