The Pakistani currency remained largely stable at around Rs285 against the US dollar in the interbank market, ticking up and ending the three-day long downward fluctuation on Tuesday with optimism over foreign currency inflows soon.
According to the State Bank of Pakistan’s (SBP) data, the domestic currency inched up 0.04%, or Rs0.12, to close at Rs285.52 against the greenback.
In the previous three consecutive working days, the currency had cumulatively dropped 0.18%, or Rs0.51, closing at a one-week low of Rs284.64/$ on Monday amid an increase in demand for foreign currency compared to its supplies in the domestic economy and low foreign exchange reserves.
The Exchange Companies Association of Pakistan (ECAP) reported that the current rate remained unchanged at Rs287/$ in the open market for the second consecutive working day.
Market talks suggest the sentiment turned around slightly positive in favour of the rupee after Caretaker Prime Minister Anwarul Haq Kakar signed multibillion-dollar investment plans with Kuwait. Governor Sindh, Kamran Tessori, stated on Tuesday that Pakistan is expected to sign investment agreements worth $100 billion with China, Kuwait, UAE, and Turkey over the next six months. The flow of investment would support the rupee's recovery to Rs180-200/$.
Read: Govt says ‘administrative measures’ stabilised rupee’s value
Former Finance Minister Ishaq Dar also reiterated that the rupee is undervalued, and there is a significant room available for recovery.
Additionally, Pakistan is projected to receive the IMF loan's next tranche of $700 million in December after the Fund's executive board gives its final approval soon. The approval would unlock another $1.5-2 billion in financing from other multilateral and bilateral creditors, including the World Bank (WB) and Asian Development Bank (ADB).
A leading financial expert stated that the inflows are expected within a couple of months, which would not only boost the country's foreign exchange reserves (held by SBP) but also support the rupee against foreign currencies. The development would also create some financial space to liberalise imports and support economic activities in the country.
Published in The Express Tribune, November 29th, 2023.
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