Foreign currency inflow hopes aid rupee’s uptrend

Currency appreciates for 9th straight day to Rs282.53/$

KARACHI:

Pakistani currency maintained its uptrend for the ninth consecutive working day on Friday and touched a fresh seven-week high at slightly above Rs282.50 against the greenback in the inter-bank market on expectation of imminent foreign currency inflows.

According to State Bank of Pakistan’s (SBP) data, the rupee appreciated 0.09%, or Rs0.26, and closed at Rs282.53 against the greenback. The currency has cumulatively risen 1.10%, or Rs3.11, in the past four weeks.

Exchange Companies Association of Pakistan (ECAP) reported that the rupee dropped 0.08%, or Rs0.25, in the open market to close at Rs284/$.

The difference between the rupee-dollar exchange rate in the two markets remained at 0.52%, or Rs1.47, well below the maximum limit of 1.25% (around Rs4 at current levels) recommended by the International Monetary Fund (IMF).

The rupee has maintained its uptrend in inter-bank dealings on reports of an agreement with the Asian Development Bank (ADB) for a financing of $1.2 billion and approval of a loan of $350 million by the World Bank.

The currency market expects fresh inflows of $1.5-2 billion in the second half (January-June) of the current fiscal year from multilateral and bilateral creditors after the IMF executive board gives final nod for the release of next loan tranche of $700 million.

Read Rupee edges up on steady foreign currency inflows

Pakistan has already reached a staff-level agreement with the IMF at the completion of first review of the $3 billion loan programme ending in March 2024.

The currency market has ignored the latest drop in the central bank’s foreign exchange reserves, which have slipped below $7 billion in the wake of debt repayments.

Pakistan’s economy requires a consistent flow of US dollars to repay the maturing foreign debt, pay the cost of mounting debt as well as for imports.

Published in The Express Tribune, December 23^rd, 2023.

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