Rupee recovers to one-week high

Appreciates after increase in petroleum prices

ISLAMABAD:

Pakistani currency partially recovered 1.13% (or Rs2.25) to a one-week high at Rs199.76 against the US dollar in the inter-bank market, ending the previous 15 working days’ long free-fall on Friday.

The currency regained after the PML-N coalition government took the much-awaited tough decision of increasing petroleum product prices with effect from May 27.

The action is expected to be followed by International Monetary Fund (IMF) to revive the much-needed $6 billion loan programme for Islamabad that is on hold for the past 11-month.

Earlier, the domestic currency had dropped significantly by 8.78% (or Rs16.32) in the past 15 working days to Rs200.01 on Thursday compared to Rs185.69 on April 30.

“Rupee recovered mainly due to some clarity on the IMF front as the government kicked start reversal of subsidies (on energy products),” Taurus Securities Head of Research Mustafa Mustansir said in a comment to The Express Tribune.

Moreover, political uncertainty reduced as former Prime Minister Imran Khan called off the long march, he said.

“We believe speculators commenced selling US dollar (in the inter-bank market) as soon as some improvement was noticed in the overall macroeconomics situation.”

Earlier, Finance Minister Miftah Ismail announced to increase petroleum products prices by Rs30 per litre with effect from Friday.

According, IMF is now expected to resume the stalled loan programme and release the next tranche of the loan of around $1 billion soon.

The global lender had conditioned the revival of the programme with the withdrawal of subsidies on energy products which are in place since February. The government was paying over Rs100 billion a month in the subsidies.

Published in The Express Tribune, May 28^th, 2022.

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