Capital inflows help rupee recover against USD in interbank market
photo: file
The Pakistani currency improved by Rs2.14 to Rs275.34 against the US dollar in the interbank market on Thursday morning after the IMF executive board gave final approval for the $3 billion loan program for Pakistan.
Market reports suggest that the currency had briefly gained Rs5.47 and recovered to Rs272 against the greenback in the early hours of trading today, but failed to sustain the significant surge.
This is the third conservative working day that the rupee has maintained an uptrend amid positive developments, rising cumulatively by around Rs4 to Rs275/$ at present.
The IMF executive board approved the immediate release of the first tranche of S1.2 billion to Pakistan.
The UAE also deposited a fresh $1 billion in the State Bank of Pakistan (SBP) on Wednesday to support the nation during these trying times. Saudi Arabia lent $2 billion on Tuesday.
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The new capital inflows from the friendly countries have cumulatively improved the country's foreign exchange reserves by $3 billion.
The IMF inflows would further boost the foreign exchange reserves and support the rupee to stabilise around the current value.
Before the fresh capital inflows, the FX reserves had stood at $4.4 billion which was barely enough for one month of import cover.
The inflows have improved the nation's capacity to repay maturing foreign debt repayment on time.
Experts said the currency would stabilise between Rs275 and Rs280 against the dollar in the short run amid prevailing high demand for foreign currency in the domestic economy.
Pakistan is set to gradually reopen imports under the IMF's new conditions. Accordingly, the demand for the dollars is set to surge.
Secondly, the country is scheduled to repay $9.5 billion in foreign debt by the end of December 2023. The repayments are including rollover and refinancing.
An expert projected the foreign exchange reserves would improve to $7.5 billion by the end of 2023 despite likely high demand for imports and foreign debt obligations.