Pakistani currency on Wednesday ticked down Rs0.08 and closed at a two-week low at Rs278.26 against the US dollar in the inter-bank market apparently on the back of speculation that the government would let the rupee depreciate further to win the next International Monetary Fund (IMF) loan programme by July 2024.
According to the State Bank of Pakistan’s (SBP) data, the rupee had closed at Rs278.18 against the greenback on Tuesday.
Market speculation suggests the currency may experience a notable depreciation to meet IMF’s conditions for a new loan package.
In addition, the lender has asked the government to liberalise imports of raw material to give a big push to economic activities, which will increase demand for the greenback.
Pakistan has initiated talks with the IMF for securing a larger loan programme of around $6-8 billion for three to four years.
Many experts, however, do not agree with the talk of rupee devaluation, believing there is still room for more appreciation of the local currency. Former state minister Ashfaq Tola, while speaking at a TV talk show the other day, estimated the fair value of the rupee at Rs235/$.
To recall, the currency has gained 10.36%, or Rs28.84, in the past eight months compared to the record low close at Rs307.10/$ in the first week of September 2023.
Exchange Companies Association of Pakistan (ECAP), however, reported that the rupee ticked up Rs0.05 to close at Rs279.45/$ in the open market.
The disparity between rupee values in the two markets stood at Rs1.19 (or 0.43%), which was well below the ceiling of 1.25% (around Rs3.50 at current levels) recommended by the IMF.
Gold up
Gold hit almost three-week high at Rs244,000 per tola (11.66 grams) in the local market on Wednesday with a surge of Rs2,900 in line with the global trend.
Earlier, the precious metal had dropped by Rs2,700 in the past three consecutive working days.
The fresh increase came after the metal became costlier by $28 to $2,365 per ounce (31.10 grams) in the international market, according to the All Pakistan Saraf Gems and Jewellers Association.
Published in The Express Tribune, May 16th, 2024.
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