Rupee stabilises at five-month high amid IMF talks

The Pakistani currency closed stable at a five-month high of Rs278.77 against the US dollar in the interbank market, buoyed by an uptick in the supply of foreign currency in the system. This marks the second consecutive working day of positive territory for the currency, observed on Thursday.

According to data from the State Bank of Pakistan (SBP), the domestic currency improved by Rs0.01 on a day-to-day basis against the greenback. Consequently, the currency has cumulatively risen by 10.16% or Rs28.34 over the past six months, compared to its all-time low closing at Rs307.10/$ recorded in the first week of September 2023.

The local currency maintained a steady trend due to a better supply of dollars, with exporters continuing to sell the greenback on futures counters to prevent any significant drop in the foreign currency.

Pakistan is poised to receive the next International Monetary Fund (IMF) loan tranche of $1.1 billion soon, as an IMF team was scheduled to reach Islamabad on Thursday to conduct the final review of the domestic economy under its $3 billion loan programme, which is set to be completed in March-April 2024.

Additionally, the newly formed government in the country has unveiled plans to secure another IMF loan programme, which will be larger and longer, providing time to implement economic reforms and address chronic issues to bolster the local economy.

The new programme aims to ensure timely repayment of maturing debt and liberalise economic growth. Newly elected Finance Minister Muhammad Aurangzeb has stated that increasing exports will sustain economic growth in the medium to long run, supporting the rupee as well. However, the currency in the open market ticked down by Rs0.04 to Rs281.26/$ during the day, according to the Exchange Companies Association of Pakistan (ECAP). Consequently, the disparity in the value of the rupee between the two markets widened to Rs2.49 (0.89%), well below the IMF recommended maximum limit of 1.25% (around Rs4).

Published in The Express Tribune, March 15^th, 2024.

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