- Finance Minister Miftah Ismail's statement on IMF seen as a negative by currency market
Pakistan's rupee dropped to its lowest level against the US dollar on Monday, closing near 204 in the inter-bank market amid uncertainty pertaining to revival of the International Monetary Fund(IMF) programme.
The local currency depreciated Rs1.51 or 0.74% to close at Rs203.86 on Monday.
On Friday, the local currency had closed at Rs202.35.
The fall on Monday comes as Finance Minister Miftah Ismail in an interview said that the IMF has expressed concern about the country's recently unveiled budget, but the government is confident it can make changes to satisfy the lender.
"There are still some concerns the IMF has about our budget and numbers," Ismail said on Saturday in Islamabad.
Pakistan is looking to getting a staff-level agreement with the IMF this month, added the finance minister, and is hoping for its next tranche of the Extended Fund Facility that would pave way for an inflow of $900 million. In addition, the successful revival of the programme would also open doors to other lenders that have so far shown reluctance until the IMF's facility is revived.
An analyst said the comment has been seen as a negative by the currency market that is already on edge.
“Miftah’s statements are negatively impacting market sentiment,” Abdullah Umer, analyst at Ismail Iqbal Securities, told Business Recorder.
However, along with Miftah's statement, there are a number of other factors impacting Pakistan's currency.
During the previous week, the rupee depreciated nearly 2.2% against the US dollar, shedding value in three of the five sessions as falling foreign exchange reserves, Moody’s downgrade of Pakistan and five of its major banks’ outlook, took a toll on the currency market.
Meanwhile, AKD Securities in its latest report said that the government's GDP and tax targets announced in its budget are not expected to be met.
“In its current shape, stipulated macro targets are unlikely to be achieved. While GDP growth (5%) and fiscal deficit (4.9%) will likely miss marks, it is tax collection at PkR7.0tn that is concerning, particularly in the context of IMF where induced economic slowdown with emphasis on import slowdown may lead to policy revisions, aka mini budgets,” said the report.
It added that the government target of achieving Rs750 billion through petroleum levy was "unrealistic".
“The same will manifest in high inflationary pressures where an 11.5%YoY CPI expectation by the GoP seems quite unrealistic,” it added.
Inter-bank market rates for dollar on Monday
BID Rs 203.90
OFFER Rs 204
In the open market, the PKR lost 1.50 rupees for buying and 2 rupees for selling against USD, closing at 203 and 205, respectively.
Against Euro, the PKR gained one rupee for both buying and selling, closing at 213 and 215, respectively.
Against UAE Dirham, the PKR lost 90 paisas for both buying and selling, closing at 55.70 and 56.20, respectively.
Against Saudi Riyal, the PKR lost 50 paisas for both buying and selling, closing at 54.10 and 54.60, respectively.
Open-market rates for dollar on Monday
BID Rs 203
OFFER Rs 205