Rupee continues to recover against US dollar, trades at 218.59

The Pakistani rupee on Wednesday gained Rs1.53 against the US dollar in the inter-bank market on Wednesday, continuing the previous day’s upward trend in the wake of the revival of the International Monetary Fund (IMF) loan programme, which was extended to $6.5 billion.

The local currency was being traded at Rs218.59 and had closed at Rs220.12 on Tuesday.

With the latest recovery, the domestic currency has cumulatively regained Rs3.33 against the greenback in the past two days.

The recovery came also due to the downward trend in the international crude oil market as Pakistan met over 70% of its energy demand through imports.

Moreover, the IMF executive board approved the release of the next loan tranche of $1.1 billion, which Pakistan is supposed to receive within a week. The receipts would help stabilise the country’s foreign exchange reserves which had fallen to a critically low level of $7.81 billion, covering less than six weeks of import.

Read Rupee snaps six-day losing streak

The IMF loan resumption will also unlock financing and investment from other multilateral and bilateral creditors like the World Bank, Asian Development Bank, Asian Infrastructure Investment Bank and friendly countries.

Pakistan has received financial commitments worth $37 billion in new foreign funding during the current fiscal year 2023 from countries including China, Saudi Arabia, United Arab Emirates and Qatar.

The funding includes rollover of previous loans, import payments and foreign debt repayments. They would also help boost the country's foreign exchange reserves to around $15 billion until June 30, 2023.

Earlier, the Pakistani rupee had lost 2.55% (or Rs5.47) in a six-day downward trend, amid the Pakistan Tehreek-e-Insaf (PTI) manoeuvring on resumption of the IMF programme as well as the removal of the ban on import of non-essential and luxury items.