Rupee gains for ninth consecutive session

KARACHI: The rupee continued its upsurge to reach Rs215.49 against the dollar on Friday, as Pakistan received the letter of intent (LoI) from the International Monetary Fund, dealers said.

The local unit gained Rs3.39 to close at Rs215.49 to the dollar from Thursday’s closing of Rs218.88 in the interbank foreign exchange market.

Currency experts said that the rupee has been on an upward stream as the market celebrated the positive news flow regarding the IMF programme.

Pakistan received the letter of intent (LoI) from the IMF on Friday, which will now be signed by the relevant authorities and sent back before the Fund’s board meeting. The country is expected to get two tranches worth $1.17 billion under a stalled loan programme.

The experts said that latest development on the IMF front provided further boost to the investors’ confidence in the market where the exporters have begun depositing their exports receipts while the importers wait for the exchange rate to stabilise, which played its role in strengthening the value of the local unit.

The country’s current account deficit has also narrowed during July on the back of lower import bill. The trade deficit came in at $2.64 billion in July, down 47 per cent or $2.32 billion on a month-on-month basis.

The resumption of the IMF programme is also likely to pave the way for Pakistan to attract funds from other multilateral lender institutions and friendly countries to provide stability to the value of rupee.

However, the foreign exchange reserves of the country are on a constant decline amid debt servicing and debt payments. The foreign currency reserves held by the State Bank of Pakistan (SBP) recorded a decline of $555 million to clock-in at $7.83 billion during the week ended on August 5, compared with $8.38 billion on July 29.

The overall liquid foreign currency reserves held by the country, including net reserves held by banks other than the SBP, stood at $13.56 billion. The net reserves held by banks amounted to $5.73 billion.

The country’s current account deficit rose 531 per cent to over $17 billion during the fiscal year 2022 due to massive increase in goods import bill. Overall, the current account deficit was $17.4 billion during the fiscal year 2022, compared with $2.8 billion in the fiscal year 2021, depicting an increase of $14.6 billion.

The local currency remained under pressure since the start of the current fiscal year. The rupee lost Rs10.64 or 5.19 per cent from Rs204.85 to dollar on June 30, 2022 to the current level of Rs215.49.

At the open market, the buying and selling of the dollar was recorded at Rs211 and Rs214 at 5:15pm PST.

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