KARACHI: The rupee extended gains against the dollar on Wednesday, amid improved market sentiments over the International Monetary Fund (IMF) approval for the disbursement of $1.1 billion to Pakistan, dealers said.
The local unit gained Rs1.37 to reach Rs218.75 against the dollar from the previous day’s closing of Rs220.12 in the interbank foreign exchange market.
Currency market experts said that the rupee continued its positive momentum for the second day after the IMF executive board’s approval boosted the investors’ confidence. The local currency fell to the historic low of Rs239.94 against the dollar on July 28, 2022.
The IMF executive board completed its seventh and eighth reviews for Pakistan under the Extended Fund Facility (EFF), which is likely to lead to the release of a $1.1 billion tranche within a week.
Additionally, the IMF board has also approved an extension of the EFF till June 2023 instead of September 2022. The board also approved augmentation of access by $1 billion, bringing the total access to $6.5 billion.
The resumption of the IMF loan programme is likely to unlock financing and investment from other multilateral, bilateral creditors and friendly countries.
Pakistan has received financial commitments worth $37 billion in new foreign funding during the fiscal year 2023 from countries including China, Saudi Arabia, United Arab Emirates and Qatar.
The rupee witnessed a continuous decline against the greenback after the government lifted the ban on the imports of luxury and non-essential items.
On August 20, 2022, the government lifted the ban on the import of luxury and non-essential items, which was imposed in the wake of a massive rupee depreciation and significant foreign exchange reserves depletion.
The foreign exchange reserves of the country fell $91 million to $13.522 billion by the week ended August 19, 2022. The foreign exchange reserves of the country were at $13.613 billion a week ago, i.e., August 12, 2022.
The official foreign exchange reserves of the State Bank of Pakistan (SBP) witnessed a decline of $87 million to $7.81 billion by the week ended August 19, 2022 as against $7.897 billion a week ago.
The country’s current account deficit rose 531 per cent to over $17 billion during the fiscal year 2022 due to massive increase in goods import bill. Overall, the current account deficit was $17.4 billion during the fiscal year 2022, compared with $2.8 billion in the fiscal year 2021, depicting an increase of $14.6 billion.
The local currency remained under pressure since the start of the current fiscal year. The rupee lost Rs13.09 or 6.78 per cent from Rs204.85 to dollar on June 30, 2022 to the current level of Rs218.75.
At the open market, the buying and selling of the dollar was recorded at Rs222 and Rs224 at 4:45pm PST.
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