Rupee falls slightly ahead of IMF programme

KARACHI:

Pakistani currency on Monday ticked down Rs0.09 and closed at Rs278.30 against the US dollar in the inter-bank market, as the currency moved on both sides of the fence ahead of securing the next International Monetary Fund (IMF) loan programme.

The currency has continued to move in a narrow range of Rs278-278.50/$ over the past few weeks, indicating it has largely remained stable for quite a long time amid “economic engineering” like control over imports.

According to the State Bank of Pakistan (SBP)’s data, the rupee had closed at Rs278.21 against the greenback on Friday.

Earlier, the currency maintained its uptrend for quite some time. However, authorities at the high level came in for criticism as multilateral institutions suggested that the currency should move both ways when market forces were determining the rupee-dollar parity.

Treasury firm Tresmark recently described the Pakistani currency level of Rs278.21/$ as “overvalued” and foresaw the rupee to start depreciating from July 2024 onwards.

It said the currency would come under pressure whenever Pakistan scaled up imports to their actual potential and allowed full repatriation of profits and dividends by foreign companies to their headquarters overseas.

It is not the thin foreign exchange reserves that are resulting in low economic activities, but it is the otherwise, according to the treasury firm.

Cumulatively, the currency has increased 10.35%, or Rs28.80, in the past eight and a half months compared to the record low close at Rs307.10/$ in the first week of September 2023.

Exchange Companies Association of Pakistan (ECAP) reported that the rupee depreciated Rs0.12 on a day-on-day basis, closing at Rs279.48/$ in the open market.

Recently, an IMF team returned back to its office after concluding staff-level talks with Pakistan for a new loan programme with the indication that the country had made significant progress on securing the loan package.

Published in The Express Tribune, May 28^th, 2024.

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