Rupee gains for fifth consecutive session

• The rupee extended gains against the dollar on Monday.
• The exchange rate gained 94 paisas to close at Rs261.88.
• It lost Rs57.08, or 27.83 per cent, from Rs204.85 against the dollar on June 30, 2022.

KARACHI: The rupee extended gains against the dollar on Monday, owing to improved sentiment in the market due to the expected revival of the International Monetary Fund (IMF) programme, dealers said.

The exchange rate gained 94 paisas to close at Rs261.88, from Friday’s closing of Rs262.82 against the dollar in the interbank foreign exchange market.

Experts said the market observed a bullish sentiment, as Pakistan inched closer to reach a staff-level agreement with the IMF for the revival of the Extended Fund Facility (EFF) programme.

In this regard, the government tabled the Rs170 billion supplementary finance bill on February 15, to help the country secure funds from the IMF to stave off a potential external default, they added.

The government’s measures included raising the general sales tax by one per cent to 18 per cent; following the hike in the prices of fuel and gas earlier, to pave the way for the release of a $1.2 billion loan tranche.

However, amid deteriorating macroeconomics, Fitch Ratings downgraded Pakistan’s long-term foreign currency issuer default rating (IDR) to ‘CCC-’ from ‘CCC+’ on February 14, due to an alarming decline in the foreign exchange reserves and the tough IMF conditions.

The newly-assigned rating of ‘CCC-’ suggests that the country is managing a high risk of default on its foreign debt.

Pakistan’s total liquid foreign exchange reserves increased $162 million to reach $8.7 billion during the week ended February 10, compared with $8.54 billion on February 3.

The forex reserves of the State Bank of Pakistan (SBP) showed an increase of $276 million to $3.2 billion during the week under review, after declining $1.68 billion during the last three weeks.

The net foreign exchange reserves held by the commercial banks declined to $5.5 billion during the week under review against $5.623 billion a week ago.

Pakistan’s import bill fell 22.53 per cent to $36 billion during July-January of the fiscal year 2022/23, compared with $46.60 billion in the corresponding period of the last fiscal year.

However, the exports also recorded a decline of 7.16 per cent to $16.47 billion during the period under review, compared with $17.74 billion in the same period of the last fiscal year.

The local currency remained under pressure since the start of the current fiscal year. It lost Rs57.08, or 27.83 per cent, from Rs204.85 against the dollar on June 30, 2022 to the current level of Rs261.88.

At the open market, the buying and selling of the dollar was recorded at Rs264.90 and Rs267.90 at 4:45pm PST.

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