The rupee hit a five-month high on Wednesday as the dollar was trading at Rs163.20 in the interbank market, data from the Exchange Companies Association of Pakistan (ECAP) showed.

“Steps taken by the State Bank of Pakistan are positive and the new rules and regulations discouraging illegal currency movement in the country have helped the rupee in the last few weeks,” ECAP Chairman Zafar Paracha said while speaking to Dawn.

Better foreign currency inflows and lower outflows due to declining imports and debt repayments have also bolstered the outlook for the local currency.

The rupee has remained stable over the last two weeks, trading below Rs165 in the interbank market after peaking at Rs165.05 on October 1.

Meanwhile, the grounding of airlines across the world due to the coronavirus pandemic has also encouraged expatriates working in other countries to send foreign currency through formal channels, added Paracha. He said in the pre-Covid days, a huge chunk of these inflows was arriving into the country through illegal channels of hundi and hawala.

Pakistan has received significant inflows in the form of remittances in the last three months. Cumulatively, inflows during July-September jumped 31.1 per cent year-on-year to $7.174 billion compared to $5.452 billion in the corresponding period last year, State Bank of Pakistan (SBP) data showed.

However, Paracha said the government should work on increasing exports to earn foreign exchange through a reduction in duties and pushing 'Make in Pakistan'.

Demand for foreign currencies has fallen after the G20 deferred Pakistan’s debt payments of around $2 billion till December. Moreover, World Bank President David Malpass on Monday said G20 creditor countries were also considering an extension in the debt suspension initiative for another six months.