- IMF developments and expectations of extension in oil credit facility from Saudi Arabia boost local currency
The rupee on Wednesday extended its gain for the second successive session against the US dollar in the inter-bank market, on account of positive developments on the external front.
At close, the rupee settled at 205.12, with a gain of Rs1.75 or 0.85% against the greenback. The local currency has appreciated Rs6.81 since dropping to its all-time low of Rs211.93 on June 22, 2022.
The development comes after Pakistan received the IMF Memorandum of Economic and Financial Policies (MEFP), following meetings last week between the two sides, Finance Minister Miftah Ismail said on Tuesday.
Later in the day, Prime Minister Shehbaz Sharif said that the IMF will club the seventh and eighth reviews of Pakistan's Extended Fund Facility (EFF), and disburse roughly $1.9 billion in coming days.
Experts say that the latest development on revival of the IMF programme, which is widely seen as crucial for Pakistan's economy, has improved investor sentiment.
“Expectations of positive news from Saudi Arabia, in the form of an extension in oil credit facility in the wake of chief of army staff General Qamar Javed Bajwa's recent visit to the kingdom has also enhanced sentiments,” Fahad Rauf, Head of Research at Ismail Iqbal Securities, told Business Recorder.
“I believe that the rupee will remain above 200, as anything below this level is not sustainable on account of high inflation,” he added.
The gains in Pak rupee come despite a high current account deficit posted in the month of May, which clocked in at $1.425 billion, compared to $618 million recorded in April, an increase of 131% on a monthly basis, showed data released by the State Bank of Pakistan (SBP).
Rauf was of the view that the latest deficit was expected on account of a slowdown in remittance inflows, which declined by over 25% on a monthly basis.
Inter-bank market rates for dollar on Wednesday
BID Rs 205.30
OFFER Rs 205.50
In the open market, the PKR gained 1.50 rupees for both buying and selling against USD, closing at 203 and 205, respectively.
Against Euro, the PKR gained 3 rupees for buying while losing one rupee for selling, closing at 212 and 214, respectively.
Against UAE Dirham, the PKR gained 50 paisas for both buying and selling, closing at 55.50 and 56, respectively.
Against Saudi Riyal, the PKR gained 50 paisas for both buying and selling, closing at 54.30 and 54.80, respectively.
Open-market rates for dollar on Wednesday
BID Rs 203
OFFER Rs 205