- Closes at 199.76 against the US dollar after 1.13% gain on Friday
- Currency's gain comes on back of positive market sentiment after govt jacked up fuel prices and moved a step closer to reviving IMF programme
The rupee snapped its lengthy 16-session depreciation run on Friday, strengthening 1.13% against the US dollar to close at 199.76 in the inter-bank market. The gain comes after a surprise overnight hike in the prices of petroleum products rekindled hope of revival of the International Monetary Fund (IMF) programme.
As per the State Bank of Pakistan (SBP), the currency closed at 199.76 after a day-on-day appreciation of Rs2.25 or 1.13%. During intra-day trading, the local currency recovered to as high as 198 against the greenback.
On Thursday, the local currency closed at 202.01, after a day-on-day depreciation of 9 paisas or 0.04%. This was the rupee's weakest closing level in history. Cumulatively, during its 16-session losing streak, the Pakistani currency lost over 8%.
Late on Thursday, the government raised the price of petrol and diesel by Rs30 per litre each to fulfil a key condition of the IMF for the release of the next tranche of $900 million. The hike in prices signalled a clearer economic policy on part of the government that had remained reluctant to remove energy subsidies announced by the previous government led by Pakistan Tehreek-e-Insaf (PTI).
While Finance Minister Miftah Ismail acknowledged that the move would contribute to inflation to some extent, he stressed that the government had no choice as it had already provided a Rs56-per-litre subsidy on diesel.
Speaking to Business Recorder, Arif Habib Limited Head of Research Tahir Abbas said increase in the rates of petroleum products is a clear indication that Pakistan has decided to make all-out efforts to resume the stalled IMF programme.
"The country looks ready to take tough measures to support the economy hence economic indicators are improving,” he said.
Moreover, the element of uncertainty has subsided and there is clarity in the market, he added.
Meanwhile, foreign exchange reserves held by the State Bank of Pakistan (SBP) decreased $75 million in the period between May 13 to May 20 to stand at $10.09 billion, with the level staying at less than 1.5 months of import cover.
On the international front, the US dollar also sank to a one-month low versus major peers on Friday as traders lowered Federal Reserve rate hike expectations amid signs the central bank might slow or even pause its tightening cycle in the second half of the year.
The dollar index , which measures the greenback against a basket of six major peers, fell as low as 101.43 for the first time since April 25. A rally in Asian stocks also sapped demand for the greenback as a haven.
Inter-bank market rates for dollar on Friday
BID Rs 199.20
OFFER Rs 199.40
In the open market, the PKR gained 3.25 rupees for buying and 2.50 rupees for selling against USD, closing at 199 and 201, respectively.
Against Euro, the PKR gained one rupee for both buying and selling, closing at 213 and 215, respectively.
Against UAE Dirham, the PKR gained 80 paisas for both buying and selling, closing at 54.20 and 54.70, respectively.
Against Saudi Riyal, the PKR gained 70 paisas for both buying and selling, closing at 52.50 and 53, respectively.
Open-market rates for dollar on Friday
BID Rs 199
OFFER Rs 201