Rupee rallies on hopes of big IMF package

Currency hits three-week high at Rs278.20 vs dollar

KARACHI:

Taking cue from Pakistan’s request to the International Monetary Fund (IMF) for a bigger bailout package of $8 billion, the rupee on Friday hit a three-week high at Rs278.20 against the US dollar in the inter-bank market.

According to the State Bank of Pakistan’s (SBP) data, the Pakistani currency gained Rs0.19 compared to Thursday’s close at Rs278.39 against the greenback.

The currency has appreciated a net 10.39%, or Rs28.90, in the past nine months compared to the record low close at Rs307.10/$ in the first week of September 2023.

The rupee staged a smart rally on the assumption that a big amount in multilateral assistance will provide financial room for the government to let economy run smoothly without any restrictions like import curbs and will help improve its capacity to repay the maturing foreign debt on time.

The local currency also got support from an uptick of $16 million in the country’s foreign exchange reserves that touched $9.11 billion in the past week, which signalled that the supply of the greenback stood higher than its demand for imports and other purposes.

The rupee is expected to remain stable in the coming weeks on the back of an outstanding 54% growth in workers’ remittances that reached an all-time high of $3.2 billion in May 2024 compared to the same month of last year.

Apart from that, hopes of new investment from China will keep the rupee strong.

The Exchange Companies Association of Pakistan (ECAP), however, reported that the rupee lost a notable Rs0.33 on a day-on-day basis in the open market, slumping to Rs280/$ for the first time in the past couple of months.

Published in The Express Tribune, June 8^th, 2024.

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