Rupee winning streak ends on IMF rumors

KARACHI: The Pakistani rupee shed Rs2.38 against the dollar to reach Rs206.94 on Tuesday as speculations regarding the delay in the International Monetary Fund (IMF) programme prevailed.

The local unit shed Rs2.38 paisas to close at Rs206.94 to the dollar from Monday’s closing of Rs204.56 in the interbank foreign exchange market.

Currency experts said that the drop in the local unit came amid speculation regarding the IMF programme due to the subsidies announced by the Punjab government on the usage of electricity, a measure contrary to the prerequisite conditions by the multilateral lender.

The rupee during the previous week recorded continuous gains against the greenback on account of inflows of around $2.3 billion in loans from Chinese banks, along with the government’s measures to convince the IMF to disburse around $2 billion under the Extended Fund Facility (EFF) programme.

However, negative sentiments prevailed in the market as the provincial government of Punjab announced free electricity to users consuming 100 units of power which is speculated to be a likely factor in causing a fresh delay in the $6 billion loan programme.

The investors’ confidence was hit despite Finance Minister Miftah Ismail rubbished reports about the suspension of the IMF programme and said the Extended Fund Facility (EFF) programme with the global money lender was on track.

The news affected the trend of recovery of the local currency maintained for over one week despite a boost to the foreign exchange reserves of the country due to the inflow of funds from a consortium of Chinese banks.

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 Rs49.4 or 31.35 per cent from Rs157.54 to dollar on June 30, 2021 to the current level of Rs 206.94.

At the open market, the buying and selling of the dollar was recorded at Rs 205.5 and Rs 208 at 3:45pm PST.