Pakistani rupee recovered 0.15%, or Rs0.43, and closed at Rs282.42 against the US dollar in inter-bank market on Thursday, ending a three-day losing streak.
The domestic currency remained mostly stable throughout the day and gained some ground after Finance Minister Ishaq Dar wrote on his Twitter handle that China had approved a second tranche of $500 million, out of the total approved loan rollover of $1.3 billion.
Last week, the State Bank of Pakistan (SBP) had received the first tranche of $500 million.
Market talk suggests the rupee won support from Prime Minister Shehbaz Sharif’s statement on Wednesday that Pakistan would reach a staff-level agreement with the International Monetary Fund (IMF) on Thursday.
The agreement will be followed by the release of next IMF loan tranche of $1.1 billion and will help unlock foreign financing of billions of dollars from other multilateral and bilateral creditors. They are waiting for the IMF’s nod before releasing the due funding.
Earlier, they had pledged over $9 billion in soft loans to help Pakistan rehabilitate people and their livelihoods as well as reconstruct infrastructure in areas hit hard by the devastating floods last year.
Financial experts said that the rupee may stabilise around current levels if the IMF programme was resumed in a day or two. Any further delay, however, will push the currency down against the greenback as the risk of default by Pakistan is on the rise amid low foreign exchange reserves.
According to latest data, Pakistan’s foreign currency reserves stand at a meagre $4.3 billion, not enough to finance one month of imports.
Published in The Express Tribune, March 17th, 2023.
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