Rupee loses most of the gains, rises only Rs1.02

KARACHI:

Pakistani currency improved 0.37%, or Rs1.02, to a one-week high at Rs276.46 against the US dollar in the inter-bank market on Thursday after the IMF executive board gave final approval for a nine-month, $3 billion loan programme for Pakistan.

Market talk indicated that the rupee briefly spiked Rs5.47 to Rs272/$ in early trading, but failed to sustain the surge by the end of the day.

It was the third consecutive working day when the currency maintained its uptrend amid positive developments, rising a cumulative 1.20%, or Rs3.34.

In the open market, the rupee improved Rs1 to Rs280/$, according to the Exchange Companies Association of Pakistan.

The gains came following reports that the IMF executive board had approved the immediate release of a first loan tranche of $1.2 billion. Later in the day, the State Bank of Pakistan received the tranche.

Besides, the UAE deposited $1 billion in Pakistan’s central bank on Wednesday to help ease financial constraints. A day ago, Saudi Arabia lent $2 billion.

The capital inflows improved Pakistan’s foreign exchange reserves by $4.2 billion and also supported the rupee in stabilising around current levels.

With the fresh financing, the country’s capacity to repay foreign debt has improved, which mitigates the risk of default. Experts anticipated that the currency would stabilise around Rs275-280/$ over the next three to six months despite a high demand for the US dollar owing to the gradual reopening of all imports.

Secondly, Pakistan is scheduled to repay $9.5 billion in foreign debt by the end of 2023. Meanwhile, gold prices rose by Rs4,000 to Rs208,000 per tola (11.66 grams) in line with the global trend. It came despite the rupee’s recovery.

Published in The Express Tribune, July 14^th, 2023.

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