Rupee Extends Winning Streak but Flood-Driven Dollar Shortage Raises Risks

The Pakistani rupee inched higher against the US dollar on Monday, marking its 27th straight gain in the inter-bank market, though analysts warned that a flood-driven dollar shortage could threaten the rally. The rupee closed at 281.52, up Rs. 0.03 or 0.01% from the previous session. Last week, it settled at 281.55, continuing its steady climb against the greenback. Bloomberg reported that Pakistan’s worst floods in decades have tightened dollar supplies, with many banks and exchange outlets halting operations after being inundated. “The supply of greenbacks has dried up as branches and banks are underwater,” said Saleem Amjad, chief executive of Link International Exchange Co. The dollar traded at Rs. 282.35 for buying and Rs. 282.55 for selling in the open market on Monday, according to the Forex Association of Pakistan (FAP). Data from the State Bank of Pakistan showed the euro slipping by 5 paisa to close at Rs. 330.35, compared with the previous day’s Rs. 330.40. The Japanese yen remained unchanged at Rs. 1.90, while the British pound rose by 82 paisa to finish at Rs. 382.39, up from Rs. 381.56 a day earlier. The disaster has killed more than 930 people and displaced over four million people in the past two months, while also disrupting supply chains from food to foreign currency. Analysts said the crisis could complicate Islamabad’s efforts to meet International Monetary Fund loan conditions and put pressure on reserves that cover less than three months of imports. The rupee has risen 1.2% since July’s low, supported by closer military oversight, an S&P Global Ratings upgrade, and a trade agreement with the United States. But dealers warned that hoarding of dollars and disrupted flows could undermine the currency’s momentum in the weeks ahead.