KARACHI: The Pakistani rupee continued its upward momentum against the dollar to reach Rs204.56 on Monday as the foreign exchange reserves of the country got a boost on the inflows of Chinese loan receipts.

The local unit gained 29 paisas to close at Rs204.56 to the dollar from Thursday’s closing of Rs204.85 in the interbank foreign exchange market.

Analysts attributed the flight of the rupee to the positive sentiments of the investors due to the inflows of around $2.3 billion of loan from a consortium of Chinese banks besides a likely positive conclusion of negotiation between the government and the International Monetary Fund (IMF) for the revival of the Extended Fund Facility (EFF) programme.

The coalition government’s measures to slash subsidies on the prices of fuel and electricity usage coupled with new tax regime in the budget for fiscal year 2023 are considered helpful for the government’s attempt to convince the multilateral lender to disburse around $2 billion dollar to the cash strapped country.

Various measures such as curbing the import bill of the country by putting a ban on the import of various luxury items, tightening the rules for auto financing by the central bank and imposing new taxes on various sectors of the country have also contributed in arresting the flight of the greenback.

Likewise, the government signed a $2.3 billion loan facility agreement with a consortium of Chinese banks which had a multiplier effect on the flight of the rupee against the foreign currency.

Pakistan also signed a Debt Service Suspension Agreement with the French Republic on Monday, for the suspension of $107 million loans, under the G-20 Debt Service Suspension Initiative (DSSI) framework.

This amount, initially repayable between July and December 2021 will now be repaid over a period of six years (including one-year grace period) in semi-annual installments.

The foreign currency reserves held by the State Bank of Pakistan (SBP) were recorded at $10.30 billion during the week ended on June 24, up $2.07 billion compared with $8.23 on June 17.

Likewise, the overall liquid foreign currency reserves held by the country, including net reserves held by banks other than the SBP, stood at $16.19 billion while the net reserves held by banks amounted to $5.88 billion.

Pakistan’s trade deficit showed a sharp growth to $3.64 billion in March 2022, registering an increase of 12 per cent over the same month of the last fiscal.

The total trade deficit escalated to $35.52 billion in the first nine months (July-March) period of the current fiscal year against $20.8 billion in the same period last fiscal year.

The local currency remained under pressure since the start of the current fiscal year. The rupee lost Rs47.02 or 29.84 per cent from Rs157.54 to dollar on June 30, 2021 to the current level of Rs204.56.

At the open market, the buying and selling of the dollar was recorded at Rs203.9 and Rs205.9 at 4:00pm PST.