Rupee hits two-month high on IMF agreement
Sources involved in discussions with the IMF revealed to The Express Tribune that the IMF is not allowing Pakistan to significantly reduce interest rates in the next fiscal year, which will keep the government’s budgetary constraints high. Photo: REUTERS
The Pakistani currency hit a two-month high at Rs278.11 against the US dollar in the inter-bank market following the early win of the International Monetary Fund (IMF) staff-level agreement (SLA) for a $7 billion Extended Fund Facility for 37 months. This marks the second consecutive working day of gains.
According to data from the State Bank of Pakistan, the domestic currency appreciated by 0.10%, or Rs0.29, from Rs278.40 against the greenback on the previous working day. With this latest recovery, the currency has appreciated for the first time in the recently started fiscal year 2024-24, gaining Rs0.23 in a day. In FY23-24, it surged 2.75% to Rs278.34/$.
Financial experts noted that the SLA, pending final approval from the IMF Executive Board, is expected to bolster foreign currency reserves and stabilise the rupee against the US dollar and other major global currencies. The currency dipped below Rs278/$ during the day’s trading on optimism surrounding the new IMF loan programme and anticipated inflows from other multilateral and bilateral creditors, which are expected to maintain a surplus of foreign currency in the domestic economy and support the rupee. Experts also believe the next IMF package will attract foreign investors to Pakistan’s government debt securities (T-bills) and the local stock market.
They also predict the rupee will remain stable at around its current level. However, the ECAP reported that the local currency remained unchanged at Rs280.50/$ for the fourth consecutive working day in the open market.