Pakistani currency hit over 11-week high near the much-anticipated level of Rs280 against the US dollar in the inter-bank market on Friday, maintaining its winning streak for the eighth consecutive working day after the International Monetary Fund (IMF) approved the release of second loan tranche of $700 million.
According to State Bank of Pakistan’s (SBP) data, the rupee appreciated 0.27%, or Rs0.75, to Rs280.36 against the greenback.
The uptrend in the currency is expected to play a pivotal role in bringing down prices of petroleum products in local markets in the second half of January 2024.
Financial markets expect the IMF’s approval of loan tranche under the ongoing $3 billion standby arrangement to help win more financing from other multilateral and bilateral creditors, as they were waiting for the IMF’s nod before approving funds for Pakistan.
The anticipated foreign inflows will continue to prop up the rupee against the greenback.
The currency has cumulatively surged 9.54%, or Rs26.74, in the past five months compared to the all-time low of Rs307.10/$ hit in the first week of September 2023.
Exchange Companies Association of Pakistan (ECAP) reported that the rupee further gained 0.16%, or Rs0.44, on a day-on-day basis in the open market to close at Rs281.50/$.
Read Rupee stays stable at 10-week high
Market talk suggests that the currency may recover beyond Rs280/$ ahead of the arrival of financial assistance from global lenders, as demand for the foreign currency has remained less than its supply in the inter-bank network.
Multilateral creditors provided $1.3 billion to Pakistan in the second half of the preceding month, surprising markets as inflows were expected after the approval of IMF’s loan tranche.
Pakistan is poised to acquire a new IMF loan programme, potentially a bigger one with long tenure, once the current arrangement ends in March 2024. The new loan package will give time and money to the country’s leadership to introduce reforms and spur the economy with sustainable growth and lower reliance on borrowing.
Published in The Express Tribune, January 13th, 2024.
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