Pakistan’s financial markets experienced a robust upswing in response to the recent International Monetary Fund (IMF) staff-level agreement for $700 million. The domestic currency celebrated, reaching a 10-day high at Rs286.50 against the US dollar in the interbank market on the second consecutive working day of the uptrend.
According to the State Bank of Pakistan’s (SBP) data, the currency appreciated by 0.31%, or Rs0.88, closing at Rs286.50 against the greenback, marking a cumulative surge of 0.57% or Rs1.64 over the past two days.
Earlier, the currency had experienced a nearly 4% decline, losing slightly over Rs11 in the prior month, reaching a seven-week low at Rs288.14/$ amid the IMF’s first economic review under its $3 billion loan programme and an increase in demand for foreign currency.
The Exchange Companies Association of Pakistan (ECAP) reported that the currency gained 0.17%, or Rs0.50, closing at Rs288.25/$ in the open market.
Market discussions suggest that the caretaker government is diligently preparing for the next elected government to secure the IMF’s next loan programme after the ongoing programme concludes in April 2024. This is viewed as a positive development for the currency, as the new programme would ensure foreign currency inflows and provide time for the government to address structural and fundamental issues in the economy.
Read: Hopes of fresh inflows drive up rupee further
Additionally, government efforts to attract multibillion-dollar foreign investment in petroleum refinery, Reko Diq, and agriculture sectors have heightened hopes that the nation will shift its heavy reliance from foreign debt to foreign investment.
Despite a $115 million drop in the low-lying foreign exchange reserves (held by SBP) to $7.4 billion, the local currency markets overlooked it. The demand for the greenback remained higher compared to supplies in the market due to pent-up import demand.
Gold shines
The All Pakistan Sarafa Gems and Jewellers Association revised the gold price upward by Rs2,200 to Rs216,500 per tola (11.66 grams) in Pakistan, aligning with the global trend on Friday.
The precious metal’s price surpassed a crucial milestone of $2,000 per ounce (31.10 grams) once more, driven by the prolonged Israeli aggression against Palestinian civilians. It rose by $20 to $2,006 per ounce in the international market, according to the domestic gold pricing body.
Published in The Express Tribune, November 18th, 2023.
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