KARACHI: The Pakistani rupee continued making gains for the third straight day showing a growth of 17 paisas on Wednesday as the investors welcomed the development in Pakistan’s talks with the International Monetary Fund (IMF), dealers said.
The local unit gained 17 paisas to close at Rs185.45 to the dollar from the previous day’s closing of Rs185.62 in the interbank foreign exchange market.
The IMF has agreed that the programme will be extended by another nine months to one year and the size of the loan would be increased from the existing $6 billion to $8 billion, which has boosted the confidence of the investors, the dealers said.
The IMF mission will visit Pakistan in May to resume discussions over policies for completing the seventh Extended Fund Facility (EFF) review, which the investors are expecting will help in supporting the country’s forex reserves while paving way for more funding from other multilateral institutions, they added.
Pakistan and the IMF agreed to extend the stalled bailout programme by up to one year and increase the loan size to $8 billion, giving the much-needed stability to the markets and the rupee.
The local unit was also provided with support from record workers’ remittances which stayed above $2 billion for a record 22th consecutive month, with an inflow of $2.8 billion received in March.
The local currency hit the historic low of Rs188.18 on April 7, as the country faced the worst political crisis resulting in uncertain economic conditions.
The local currency showed appreciation against the dollar after the State Bank of Pakistan (SBP) on April 7, announced an unprecedented increase in the key policy rate coupled with other measures to curb the import bill of the country.
The central bank also imposed 100 per cent cash margins on 177 items in a bid to curb their imports, which helped easing pressure on the rupee and reducing trade and the current account deficits.
The country’s foreign exchange reserves clocked-in at $17.045 billion by the week ended April 16, 2022, State Bank of Pakistan (SBP). The foreign exchange reserves of the country were at $17.028 billion a week ago.
The official foreign exchange reserves of the State Bank also improved by $36 million to $10.886 billion by the week ended April 16, 2022 as compared with $10.85 billion a week ago.
The foreign exchange held by commercial banks, however, fell by $19 million to $6.157 billion by the week ended April 16, 2022 as compared with $6.178 billion a week ago.
The ballooning current account deficit is another reason for escalation in the dollar value. Pakistan’s current account deficit ballooned to $12 billion during the first eight months (July – February) 2021/22 against a surplus of $994 million in the corresponding months of the last fiscal year.
The local currency remained under pressure since the start of the current fiscal year. The rupee lost Rs27.91 or 17.71 per cent from Rs157.54 to dollar on June 30, 2021 to the current level of Rs185.45.
At the open market, the buying and selling of the dollar was recorded at Rs185 and Rs187 at 3:00pm PST.
