Pakistani currency on Monday remained stable at Rs278.40 against the US dollar in the inter-bank market ahead of the International Monetary Fund (IMF) executive board meeting later in the day for potential approval of the last loan tranche of $1.1 billion.
According to the State Bank of Pakistan’s (SBP) data, the rupee ticked down by Rs0.01 against the greenback compared with Friday’s close at Rs278.39/$. The currency got support from analysts’ expectations that the central bank would leave its benchmark policy rate unchanged in the monetary policy announcement. Later, the SBP announced its decision to maintain the status quo, keeping the rate on hold at a record high of 22% for the next six weeks.
The rupee has gradually depreciated 0.49%, or Rs1.37, in the past one month compared to the five-and-a-half-month high close of Rs277.03/$ in the last week of March 2024.
The downtick was fuelled by the increase in demand for US dollars for import payments, though their supply also remained elevated in the wake of higher inflows of workers’ remittances during Ramazan. Remittances hit a two-year high of nearly $3 billion in March, helping achieve a nine-year high current account surplus of $619 million for the month. Exchange Companies Association of Pakistan reported that the rupee dropped Rs0.09 on a day-on-day basis, closing at Rs279.59/$ in the open market on Monday.
The potential approval from the IMF board and the subsequent release of the loan tranche will help take the country’s foreign exchange reserves to around $9 billion. This may extend support to the local currency as well.
Published in The Express Tribune, April 30th, 2024.
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