Rupee drops after IMF’s budget concerns

The rupee on Thursday came under renewed pressure as it ticked down 0.07%, or Rs0.19, to Rs287.37 against the US dollar in interbank market amid diminishing prospects of revival of the IMF programme after the lender expressed concerns over the FY24 budget.

The currency had closed at Rs287.18 against the greenback on Wednesday, according to SBP data.

In the open market, the currency dropped 0.33%, or Rs1, to Rs295 against the greenback, according to the Exchange Companies Association of Pakistan (ECAP). As a result, the exchange rate spread between the two markets widened to Rs8 to a dollar. One of IMF’s conditions was to narrow this gap.

ECAP President Malik Bostan said that the central bank and currency dealers in open market wanted to see the gap contract to 2% (Rs3-5) to end distortion in currency markets. Macroeconomic developments, however, indicate the IMF may not revive its programme expiring on June 30, 2023.

Research houses have projected the exchange rate in the range of Rs290-295/$ in inter-bank market at the end of this fiscal year.

Published in The Express Tribune, June 16^th, 2023.

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