Rupee hits five-week high at Rs278.32/$
SBP governor revealed that the state bank is preparing to introduce new notes made from polymer paper, with the process expected to be completed by year-end. PHOTO: FILE
The Pakistani rupee reached a five-week high at Rs278.32 against the US dollar, appreciating by Rs0.10 in the inter-bank market, driven by expectations of significant foreign investment and new external loans. According to data from the State Bank of Pakistan (SBP), this marks the third consecutive day of gains for the domestic currency, which has strengthened by a cumulative Rs0.34.
The Exchange Companies Association of Pakistan (ECAP) reported that the local currency remained stable at Rs280/$ in the open market for the sixth consecutive working day.
The recent appreciation comes after Saudi Arabia expressed interest in acquiring a 15% equity stake in Pakistan's Reko Diq project and sharing the cost of infrastructure development near the project site. Additionally, market confidence was boosted by clarity on inflows of new foreign commercial loans worth $4 billion from Middle Eastern banks, expected by the next fiscal year.
These developments support Pakistan in fulfilling the International Monetary Fund's (IMF) condition to bridge a $2 billion financing gap, to become eligible for the $7 billion IMF loan programme.
However, the currency market largely ignored the fact that Pakistan is still not on the IMF Executive Board's agenda for its next meeting in early September. The government had earlier claimed that the Fund would approve the $7 billion programme in September, after a delay from August. Additionally, the government extended the deadline for due diligence on Pakistan International Airlines' (PIA) privatisation, which is speculated to be a precondition for the new loan programme. Any further delay in securing final IMF approval could pressure the rupee.