Uncertainty about IMF review pushes rupee down

Currency slips for fifth day in a row, losing 0.12% against US dollar

Salman Siddiqui November 18, 2022
Rupee has declined. photo: file


The uncertainty over the ninth review of Pakistan’s economy by the International Monetary Fund (IMF) under its loan programme has resulted in the rupee sliding for
the fifth consecutive working day.

The currency lost 0.12% (or Rs0.26) to close at Rs222.67 against the US dollar in the inter-bank market on Thursday.

The IMF has delayed the ninth review of the economy, making currency traders apprehensive of the future of the loan programme.

However, in an online meeting during the day, Finance Minister Ishaq Dar and IMF Mission Chief for Pakistan Nathan Porter removed the prevailing uncertainty.

“They have agreed to expeditiously conclude engagement at the technical staff level and proceed for the ninth review,” Pak-Kuwait Investment Company Head of Research Samiullah Tariq said while talking to The Express Tribune.

“The development should extend a little support to the rupee. The currency, however, will continue to move in a narrow band of Rs220-225 against the greenback till the IMF clears the ninth review,” he added.

The rupee has cumulatively decreased by 0.56% (or Rs1.25) in the past five working days, as compared to the November 10 close at Rs221.42, according to the State Bank of Pakistan’s data.

Tariq explained that the increased demand for dollar for import payments kept the rupee under pressure in the past few days.

“The improvement in the country’s foreign exchange reserves by $3 million in the previous week to around $8 billion suggests that the central bank is not providing foreign currency for imports. Rather, traders are arranging payments from the inter-bank market,” he said.

Tariq noted that the exchange rate was fluctuating in line with the demand and supply of foreign currency in the inter-bank market. “The increased demand for dollars has kept the exchange rate under pressure.”

Published in The Express Tribune, November 18th, 2022.

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