Rupee stabilises as IMF deal hopes still alive

Pakistani rupee stabilised at around Rs278 against the US dollar in inter-bank dealings on Tuesday as it maintained the uptick for the third consecutive working day.

The currency inched up 0.02%, or Rs0.05, and closed at Rs277.87 against the greenback, according to the State Bank of Pakistan (SBP).

In open market, the rupee-dollar exchange rate remained stagnant at Rs279 to a dollar, according to the Exchange Companies Association of Pakistan.

Talking to The Express Tribune, Arif Habib Limited economist Sana Tawfik said, “The rupee consolidated in anticipation of a staff-level agreement (SLA) with the International Monetary Fund (IMF) this week for the revival of its programme.”

Besides, new debt inflows from China worth $500 million this week and $700 million last week helped stabilise the forex reserves above $4 billion; shielding the local currency against the greenback, she added.

“The rupee will stabilise somewhere in the range of Rs270-275/$ in the short run. Our research house is of the view…rupee will stay around Rs275/$ by June 30, 2023.”

Cumulatively, in the past three working days, the rupee gained 2.6%, or Rs7.22, compared to an all-time low of Rs285.09/$ hit on Thursday last week. The currency lost a massive 6.6%, or Rs19, to the record low of Rs285.09/$ in a day over IMF’s concerns that the government was still controlling the currency.

The currency may settle around current levels or may slightly extend recovery if SLA is struck this week. It may, however, depreciate if the deal is delayed.

Banks are reporting improved foreign currency inflows on account of worker remittances after the latest rupee depreciation. Inflows should further improve ahead of the beginning of Ramazan later this month.

Published in The Express Tribune, March 8^th, 2023.

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