With fresh gains, rupee at 5-1/2-month high

Pakistani currency on Monday hit almost five-and-a-half-month high at Rs278.63 against the US dollar in the inter-bank market, maintaining its uptrend for the fourth consecutive working day amid talks with the International Monetary Fund (IMF) for the release of last loan tranche and for a new programme.

According to State Bank of Pakistan’s (SBP) data, the rupee appreciated 0.03%, or Rs0.11, against the greenback on a day-on-day basis compared to Friday’s close at Rs278.74/$.

The local currency has cumulatively strengthened 10.21%, or Rs28.47, in the past over six months compared to the all-time low of Rs307.10/$ touched in the first week of September 2023.

The Exchange Companies Association of Pakistan (ECAP) reported that the rupee remained stable at Rs281.20/$ in the open market for the second successive working day.

Read: Rupee hits new 5-month high at 278.74/$

The currency got support from the ongoing smooth talks with the IMF for the release of last tranche of $1.1 billion under the $3 billion standby arrangement ending in March-April 2024.

The five-day talks were scheduled to end on Monday with an expected staff-level agreement, which means that the IMF mission is convinced that Pakistan has met almost all the targets set for the last tranche.

On the other hand, the government has decided to formally approach the IMF for a longer and larger loan programme of $8 billion in mid-April 2024 when the global lender will hold its annual meetings. Pakistan’s Finance Minister Muhammad Aurangzeb is set to attend the meetings along with his economic team.

Earlier, Pakistan’s foreign exchange reserves, held by the SBP, rose by $17 million to $7.9 billion, according to the central bank’s weekly update. The increase in forex reserves indicates that the supply of foreign currency is higher than its demand in the banking system. Exporters are consistently selling increased dollar proceeds on futures’ counters.

Published in The Express Tribune, March 19^th, 2024.

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