Pakistani currency slightly appreciated by Rs0.09 and closed at Rs278.41 against the US dollar in the inter-bank market on Thursday, ending a three-day losing streak ahead of anticipated approval of a new $7 billion loan programme by the International Monetary Fund (IMF) executive board in August.
The rupee ticked up despite a $397 million drop in the central bank’s foreign exchange reserves in the week ended July 19, 2024 mainly due to external debt repayment. However, the reserves stayed above $9 billion for the fourth consecutive week.
According to the State Bank of Pakistan’s (SBP) data, the rupee had closed at Rs278.50 against the greenback on Wednesday, taking three-day losses to Rs0.38.
The IMF loan programme is set to give a boost to foreign currency inflows by unlocking assistance from other multilateral and bilateral creditors. These inflows will prop up the rupee against the greenback and other major currencies.
Earlier, Pakistan reached a staff-level agreement with the IMF for the $7 billion Extended Fund Facility, a 37-month programme which will require the government to undertake drastic reforms.
In addition, lower international crude oil prices also provided support to the rupee recovery against the greenback.
Global crude benchmark West Texas Intermediate slipped below $78 per barrel from around $82 a few days ago owing to weak demand, reducing cost of energy imports and lowering demand for dollars.
Exchange Companies Association of Pakistan (ECAP) reported that the rupee shed Rs0.05 on a day-on-day basis in the open market, closing at Rs279.70 to a dollar.
The local currency has remained largely stable and continued to move in a narrow band of Rs278-278.63/$ in the inter-bank market over the past around five months.
According to latest foreign currency reserves data released by the State Bank, its reserves retreated to $9.03 billion in the week ended July 19, 2024 from a two-year high of $9.42 billion in the prior week.
The drop came after a surge of $528 million over the course of three consecutive weeks.
“Current reserves provide import cover for around 1.65 months,” said Arif Habib Limited. The central bank added that the foreign currency reserves held by commercial banks went up $28.4 million in the week under review and reached $5.31 billion compared to $5.28 billion in the preceding week.
Overall, the country’s reserves dipped $368.1 million to $14.33 billion compared to $14.70 billion a week earlier.
Gold drops
Gold decreased Rs2,300 to Rs250,500 per tola (11.66 grams) on Thursday amid a downturn in global markets on the back of profit-selling. According to the All Pakistan Saraf Gems and Jewellers Association, the international bullion price slipped below the crucial level of $2,400 per ounce on profit-selling and stood at $2,370 with a loss of $43.
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