Pakistani currency on Wednesday closed stable at Rs278.30 against the US dollar in the inter-bank market, indicating that demand and supply of the foreign currency have hit equilibrium.
Before closing at the previous day’s level, the currency briefly extended gains by Rs0.13 and reached its intra-day high at Rs278.17 against the greenback on optimism Prime Minister Shehbaz Sharif would be able to get promises of new investment from Beijing under the China-Pakistan Economic Corridor (CPEC). He began the trip to China on Wednesday.
Pakistani authorities expect new investment of $2 billion under CPEC. Besides, PM Sharif is expected to win the rescheduling of outstanding dues worth over Rs500 billion of the Chinese power producers or get new loans to repay them.
The upcoming heavy foreign debt repayment amounting to $10 billion by the end of July did not let the rupee sustain the intra-day gains by the close of market.
The currency has surged a net 10.35%, or Rs28.80, in the past nine months compared to the record low close at Rs307.10/$ in the first week of September 2023.
Also, the Exchange Companies Association of Pakistan (ECAP) reported that the rupee closed unchanged on a day-on-day basis at Rs278.59/$ in the open market.
Market talk suggests the rupee will remain stable near and around current levels till the end of June 2024 owing to muted demand for the greenback for imports.
It, however, would resume its devaluation from July onwards.
Pakistan’s government has assumed the rupee-dollar parity at Rs295/$ for the next fiscal year with a depreciation of 5.7%. Contrary to that, the International Monetary Fund, with which Pakistan is negotiating a new loan programme, has projected the exchange rate at Rs329/$ as it sees a significant devaluation of 15.5% in the next fiscal year beginning July 2024.
Published in The Express Tribune, June 6th, 2024.
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