Dollar Cheaper, Stock Market Also Got Good News

Karachi The dollar became cheaper in the interbank market, while there was good news from the stock market.

According to the details, a bullish trend is being seen at the start of business today in Pakistan Stock Exchange, where the index crossed the limit of 80 thousand. The 100 index of Pakistan Stock Exchange increased by 999 points to 80 thousand on 16. At the end of the day’s trading, the index closed at 79 thousand 17 points.

On the other hand, according to Geo news, the dollar became cheaper by 10 paise to 278 rupees 34 paise in the interbank market, it had closed at the level of 278.44 rupees the previous day.

Understand the Dollar Suddenly Get Expensive or Cheap in Pakistan

The value of the US dollar in Pakistan can change dramatically, sometimes making it seem suddenly expensive or cheap. These fluctuations are influenced by a variety of factors, both domestic and global. Let’s break down why these changes happen.

Economic Instability

When Pakistan’s economy hits rough patches—like during a recession or high inflation—the value of the dollar tends to rise. Investors often flock to the dollar as a safe haven during times of economic uncertainty, driving up its value against the rupee.

Trade Deficits

Pakistan has a history of trade deficits, meaning it imports more than it exports. To pay for these imports, Pakistan needs more dollars. When the supply of dollars is limited, but demand remains high, the dollar becomes more expensive.

Foreign Debt

Pakistan has substantial foreign debt that requires regular repayments in dollars. When these payments are due, the demand for dollars increases, which can push up its value relative to the rupee.

Political Uncertainty

Political instability can lead to a lack of confidence in the rupee. If investors feel that Pakistan’s political environment is unstable, they may turn to the dollar as a safer investment, increasing its value against the rupee.

Global Economic Conditions

International factors, like changes in US interest rates or fluctuations in global oil prices, can also affect the dollar’s value in Pakistan. For example, if the Federal Reserve raises interest rates, the dollar might strengthen globally, impacting its value in Pakistan.

Strong Economic Performance

When Pakistan’s economy is performing well, the dollar can become cheaper. A strong economy often means less need for foreign currency, which can reduce demand for dollars and decrease its value relative to the rupee.

Increased Export Earnings

If Pakistan’s exports rise, there’s an influx of dollars into the country. Exporters convert their earnings into rupees, which can increase the value of the rupee and make the dollar cheaper.

Effective Foreign Exchange Policies

Good foreign exchange management by the Pakistani government and central bank can stabilize or even strengthen the rupee. Actions like boosting foreign reserves or implementing currency stabilization measures can help make the dollar less expensive.

Political Stability

When the political situation is stable, it often boosts investor confidence. More investment in Pakistan can strengthen the rupee, reducing the dollar’s value relative to the rupee.

Global Economic Trends

Global shifts, such as a weakening US economy or changes in international trade dynamics, can also impact the dollar’s value in Pakistan. If the dollar weakens globally, it might become cheaper in Pakistan as well.

In Summary