Rupee hits 2-week high amid positive outlook
Photo: AFP
Pakistan’s currency markets experienced a boost in sentiment for the third consecutive day on the news of a potential influx of foreign currency, as the rupee gained 0.09% against the US dollar, reaching a two-week high of Rs286.73 in the interbank market on Thursday. The open market saw the currency hold steady at Rs292 against the greenback, maintaining its position for the second consecutive working day.
The positive outlook in the markets can be attributed to Prime Minister Shehbaz Sharif’s meeting with International Monetary Fund (IMF) Managing Director Kristalina Georgieva in Paris. The meeting has raised hopes for the revival of the IMF loan programme before its official end on June 30. In his efforts to secure the IMF loan programme for Pakistan, the prime minister also engaged with influential diplomats, including those from the United States.
In addition, friendly nations such as Saudi Arabia, the UAE, and China are considering substantial investments of around $20 billion in long-term projects within Pakistan. These developments have further contributed to the positive sentiment in the markets.
Reports of potential foreign investors, including the UAE, showing interest in acquiring terminals at seaports and an airport in Pakistan, have also supported the improvement.
Over the past three days, the currency has cumulatively recovered 0.18% in the inter-bank market, amounting to Rs0.53. However, the limited availability of US dollars in the domestic economy has prevented a larger gain. Authorities are currently working on contingency plans to avoid the looming risk of default on foreign debt repayment. Pakistan’s foreign exchange reserves currently stand critically low at around $3.5 billion, providing only a three-week import cover. Between July and December 2023, Pakistan is expected to repay another $4.5 billion in foreign debt, excluding loans that are anticipated to be rolled over and refinanced in the first half of the upcoming fiscal year.
Published in The Express Tribune, June 23rd, 2023.
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