KARACHI: The Pakistani rupee gained 1.76 against the dollar to reach Rs205.11 on Wednesday, as the government expressed the hope to successfully conclude the International Monetary Fund (IMF) programme, dealers said.
The local unit gained Rs1.76 to close at Rs205.11 to the dollar from Tuesday’s closing of Rs206.87 in the interbank foreign exchange market.
The dealers said that the rupee gained for the second consecutive session as the Prime Minister announced that the government is nearing an agreement for the disbursement of around $2 billion from the IMF.
Additionally, the government signed a $2.3 billion loan facility agreement with a consortium of Chinese banks which also played its role in providing stability to the value of the rupee, they added.
The local unit showed respite in the interbank as the government signed agreements with friendly countries for loan programmes. Pakistan signed a Debt Service Suspension Agreement with the French Republic on Monday, for the suspension of $107 million loans, under the G-20 Debt Service Suspension Initiative (DSSI) framework.
This amount, initially repayable between July and December 2021 will now be repaid over a period of six years (including one-year grace period) in semi-annual installments.
The additional inflow from the IMF and China will further boost the foreign exchange reserves of the country which have depleted to an alarmingly low level.
The foreign exchange reserves held by the State Bank of Pakistan (SBP) declined by a massive $748 million during the week ended on June 17, falling to a critical level of $8.24 billion.
Total liquid foreign reserves held by the country stood at $14.21 billion as of June 17, with net foreign reserves held by commercial banks clocking in at $5.97 billion.
The widening current account deficit is another threat to the stability of the local unit. Pakistan’s trade deficit showed a sharp growth to $3.64 billion in March 2022, registering an increase of 12 per cent over the same month of the last fiscal.
The total trade deficit escalated to $35.52 billion in the first nine months (July-March) period of the current fiscal year against $20.8 billion in the same period last fiscal year.
The local currency remained under pressure since the start of the current fiscal year. The rupee lost Rs47.57 or 30.19 per cent from Rs157.54 to dollar on June 30, 2021 to the current level of Rs205.11.
At the open market, the buying and selling of the dollar was recorded at Rs204 and Rs206.5 at 3:15pm PST.