Rupee maintains winning streak in interbank market

• The local unit gained Rs1.51 to close at Rs213.98 to the dollar from Friday’s closing of Rs215.49.
• The surge in the value of the rupee is due to the positive sentiments amid a likely disbursement of $1.17 billion from the IMF.
• The resumption of the IMF programme is likely to pave the way for Pakistan to attract funds from other multilateral lender institutions and friendly countries.

KARACHI: The rupee continued to gain against the dollar, as it reached Rs213.98 on Monday, amid improved economic conditions of the country.

The local unit gained Rs1.51 to close at Rs213.98 to the dollar from Friday’s closing of Rs215.49 in the interbank foreign exchange market.

The analysts said that the surge in the value of the rupee is due to the positive sentiments amid a likely disbursement of $1.17 billion from the International Monetary Fund (IMF) under the Extended Fund Facility (EFF) programme.

Additionally, the news that Saudi Arabia plans to renew its $3 billion deposit in assistance to Pakistan also uplifted the market sentiments.

The investors anticipate the local unit to gain further against the dollar over the likely inflows from the IMF and other friendly countries which resulted in the enhanced confidence of the investors who opted for selling the dollar while the importers waited for the greenback to further depreciate.

Pakistan received the letter of intent (LoI) from the IMF on August 12, 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 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 Rs9.13 or 4.45 per cent from Rs204.85 to dollar on June 30, 2022 to the current level of Rs213.98.

At the open market, the buying and selling of the dollar was recorded at Rs208 and Rs212 at 4:30pm PST.

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