A day after the government bagged the much-awaited deal with the International Monetary Fund (IMF), the rupee on Wednesday broke its losing streak against the dollar, rising by Rs 3.80 in the interbank market.
According to the Forex Association of Pakistan (FAP), the rupee today rose by Rs 3.80 to Rs 208 against the dollar, which closed at 2:50 pm on Tuesday.
The development comes after weeks of continuous depreciation in the value of the rupee, mainly attributed to the country’s rising import bill and dwindling forex reserves. Yesterday, the greenback was at an all-time high, rising by Rs 2 and trading higher against the local currency for the eighth consecutive session. Since April 11, when the PML-N coalition government took power, the dollar has risen by over Rs 30.
Zafar Paracha, general secretary of the Exchange Companies Association of Pakistan, attributed the recovery of the rupee to the good news related to the IMF deal. “Hopefully once the deal is finalized by the end of this week, it will pave the way for loans from China and other financial institutions.”
Tresmark’s Head of Research Komal Mansoor also said that the market was expecting the local currency to rebound by 212 points based on the IMF deal, which actually happened.
“With tax reform and petroleum levy in place, there are no other major hurdles,” he said, confident that market sentiment will shift from “highly negative to neutral” and eventually positive.
Meanwhile, Saad bin Nasser, Director of Metis Global told don.com Though the rupee has received some support from IMF news, it is likely to remain under pressure during the next few sessions till the final confirmation is announced.
The IMF loan facility was stalled since early April as talks with international moneylenders remained inconclusive, with the lender earlier expressing reservations on fuel and energy subsidies introduced by the previous PTI government and now targeting the targets set by the new government for the upcoming financial year. Feather. year.
Pakistan signed a 39-month, $6bn Extended Fund Facility with the IMF in July 2019, but the fund halted distribution of nearly $3bn after the previous government reneged on its commitments and announced fuel and energy subsidies .
However, as a breakthrough last night, Pakistan reached an agreement with the program on the federal budget for 2022-23, after officials committed to generate 436 billion rupees more taxes and gradually increase the petroleum levy. Extended Fund Facility (EFF) has been revived. Up to Rs 50 per litre.
Earlier, Esther Perez Ruiz, the Resident Representative of the IMF in Pakistan, told dawn: “Discussions continue between IMF staff and officials on policies to strengthen macroeconomic stability in the coming year.”
The IMF mission will finalize the monetary targets with the State Bank in the next few days and, in the meantime, share the draft of the Memorandum of Economic and Financial Policy (MEFP).
more to follow