Despite rise in forex reserves, rupee falls

Currency loses 0.31% of value, stands at Rs277.90 vs dollar

KARACHI:

Pakistani currency dropped 0.31%, or Rs0.86, to Rs277.90 against the US dollar in the inter-bank market on Friday as the currency continued to consolidate around current levels post-new International Monetary Fund (IMF) deal.

The currency saw moderate depreciation despite the improvement in Pakistan’s foreign exchange reserves for the second consecutive week, when they reached $4.4 billion.

Market talk suggests the rupee will continue to move on both sides of the fence in an attempt to stabilise ahead of the IMF’s executive board meeting on July 12, which will consider giving approval to a new $3 billion loan programme for Pakistan.

The currency has recovered a net 2.91%, or Rs8.09, to Rs277.90/$ following the IMF deal on Friday last week.

Earlier, it registered a historical drop of 28% (or Rs81) to Rs286/$ in the previous fiscal year ended June 30, 2023.

Experts said that the rupee may recover more ground after the IMF released its first tranche of around $1 billion sometime in July and other financial institutions and friendly countries provided new financing.

Global securities firms, however, projected that the rupee may depreciate by another 15-25% to Rs317-340/$ in fiscal year 2024 which started on July 1, 2023.

They said that the country was largely meeting its financial requirements through borrowing, mainly from domestic sources, and its domestic and foreign debt had grown to unsustainable levels. They needed to be restructured during fiscal years 2024 and 2025.

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

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