Currency: Rupee strengthens against dollar

KARACHI: The rupee strengthened, closing at 97.36/39 against the dollar, compared to Wednesday’s 97.69/73. The rupee is under pressure due to import and oil payments and may fall further due to strong demand for the dollar from importers, a dealer said. The currency has remained under pressure due to debt servicing to the International Monetary Fund (IMF). Pakistan recently repaid $394.3 million on an IMF Stand-By Arrangement loan. The country has to pay $3.4 billion in 2012-13, $3.43 billion in 2013-14 and $1.35 billion in 2014-15 to retire the loan. The country’s foreign exchange reserves will continue to face pressure due to debt servicing in the next three years. According to reports, a balance of payment crisis is being predicted after March 2013, as country’s forex outflows are likely to remain at $1 billion per month, which may force Pakistan to negotiate for a fresh IMF programme if pressure is not arrested. Overnight rates in the money market ended at 9.4% compared to Wednesday’s close of 9.5%.

Published in The Express Tribune, December 21^st, 2012.