As per the State Bank of Pakistan (SBP), the rupee closed at 174.71 after a day-on-day appreciation of 16 paisas or 0.09%. On Thursday, the currency had gained two paisas to finish at 174.87.

“The rupee will remain range-bound between 174-76,” Samiullah Tariq, Head of Research at Pak-Kuwait Investment, told Business Recorder.

He said improvement in trade fundamentals and increase in foreign exchange reserves created a positive sentiment in the market.

With the arrival of foreign inflows, including funds from the International Monetary Fund, the country’s total liquid foreign exchange reserves rose by $1.636 billion, reported the SBP on Thursday.

The country’s total liquid foreign exchange reserves stood at $23.721 billion as of February 4, 2022 compared to $ 22.048 billion as of Jan 28, 2022.

“Speaking long-term, the rupee is expected to depreciate 3-4% against US dollar per annum on account of inflation differential,” said Tariq.

He added that the local currency is moving towards its real value.

Meanwhile, Zafar Paracha, General Secretary Exchange Companies Association of Pakistan (ECAP), was of the view that the ongoing appreciation is a reflection of “improvement in macroeconomic indicators, and increase in foreign exchange reserves".

Paracha, however, was more optimistic and said the rupee is expected to appreciate to 165 in the long term, on account of economic indicators, and by Rs2 in the short term.

Saad Khan, Head of Research at IGI Securities, said the rupee would depreciate in the long-term, as he believed that the “plug-in play of dollar offers but a temporary relief on account of inflation, interest rate and weak economy”.

Khan was of the view that dollar-saving measures is the only solution to avoid rupee decline, and the government should use both long- and short-term measures to address the issue.

“Long-term measures include reduction in debt reliance and increasing exports. Whereas, in the short term, import of all non-necessary items should be curbed by increasing tariffs,” said Khan.