Pakistani currency ticked up to a 10-week high above Rs281 against the US dollar in the inter-bank market on Thursday, maintaining its winning streak for the seventh consecutive working day ahead of the International Monetary Fund’s (IMF) board meeting for potential approval of the release of second loan tranche of $700 million.
According to State Bank of Pakistan’s (SBP) data, the rupee inched up 0.01%, or Rs0.02, and closed at Rs281.11 against the greenback.
The currency has gained 9.25%, or almost Rs26, in the past four months compared to the all-time low of Rs307.10 hit in the first week of September 2023.
Exchange Companies Association of Pakistan (ECAP) reported that the rupee appreciated 0.08%, or Rs0.24, in the open market and closed at Rs281.94/$.
Workers’ remittances rose 13% to $2.38 billion in December 2023 compared to the same month of last year, signaling that foreign currency inflows were higher compared to their demand, which supported the strengthening of the rupee.
Read Rupee surges on remittance boost
Taking cue from the downward trend in international crude oil prices, the rupee closed stable. With the weakening of crude prices, the demand for the greenback for fuel imports has decreased, as the country is a major importer of oil.
Market talk suggests that the local currency markets have priced in events like the IMF executive board meeting, which is likely to give its nod on Thursday for the release of loan tranche for Pakistan.
Its decision will unlock inflows from other multilateral and bilateral creditors. The much-needed foreign assistance will give a clear direction about the rupee-dollar exchange rate.
Multilateral lenders have already provided $1.3 billion in the two weeks ended December 29, 2023, taking Pakistan’s foreign exchange reserves, held by the SBP, to five-and-a-half-month high at $8.22 billion.
Published in The Express Tribune, January 12th, 2024.
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