Rupee gains 61 paisas against dollar on foreign inflow hopes

KARACHI: The rupee appreciated 61 paisas against the dollar on Wednesday, as the market is expecting inflows from friendly countries; following approval of the International Monetary Fund (IMF) loan programme, dealers said.

The rupee closed at Rs261.90 against the greenback from the previous day’s closing of Rs262.51 in the interbank foreign exchange market.

The local currency recorded a historic low of Rs276.58 against the dollar on February 3, 2023. However, after touching the lowest level, it recovered 5.3 per cent, or Rs14.68, against the dollar till the end of the market on February 22, 2023.

The dealers said the market was anticipating successful negotiations between the local authorities and the IMF, which would pave the way for the release of $1.2 billion tranche.

They also said the approval to the IMF tranche under the Extended Fund Facility (EFF) would also open doors for inflows from other friendly countries.

The rupee is under significant pressure due to a massive fall in the foreign exchange reserves.

The official foreign exchange reserves of the central bank stood at $3.192 million by the week ended February 10, 2023. The current level of the official foreign exchange reserves are only to provide import cover for around two weeks or 19 days.

Meanwhile, the import bill for January 2023 has been recorded at $4.856 billion, as per the Pakistan Bureau of Statistics (PBS).
The benchmark foreign exchange reserves of a central bank should be at a level to provide three months of import cover.

The official foreign exchange reserves of the State Bank of Pakistan (SBP) fell sharply to an almost nine-year low. Previously, the official reserves of the SBP were seen at $3.19 billion in February 2014.
The foreign exchange reserves held by the central bank witnessed a record high of $20.146 billion by the week ended August 27, 2021. Since then, these have declined by $16.954 billion.

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