- Rupee expected to hover around 200 level, while future direction will be dictated by international oil prices, says one analyst
The rupee continued to strengthen for a third consecutive session against the US dollar in the inter-bank market on Thursday, appreciating 0.13%, as the government managed to pass the Federal Budget 2022-23 and inched closer towards revival of the stalled International Monetary Fund (IMF) programme.
The local currency closed at 204.85, an appreciation of Re0.27 or 0.13% against the US dollar. The rupee has appreciated Rs7.08 since dropping to its all-time low of Rs211.93 on June 22, 2022.
The improvement comes as the National Assembly on Wednesday passed the Federal Budget 2022-23 by incorporating significant amendments to the Finance Bill, 2022 on the dictation of the IMF.
The government faced no difficulty in passing the budget. There was virtually no opposition in the house as Pakistan Tehreek-e-Insaf (PTI) – the majority seat winning party – had resigned en mass in wake of Imran Khan’s ouster as prime minister in March this year.
The Finance Bill, 2022 – moved by State Minister for Finance Dr Aisha Ghaus Pasha – was approved with majority votes after all the amendments proposed by the opposition were rejected.
The passage of the budget for the fiscal year 2022-2023 brings the government a step closer to reviving the stalled IMF programme.
On Tuesday, Pakistan received the IMF Memorandum of Economic and Financial Policies (MEFP), following meetings last week between the two sides.
Prime Minister Shehbaz Sharif has 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 the latest developments on the IMF programme, widely seen as crucial for Pakistan's economy, has improved investor sentiment.
“The rupee is reverting towards its REER (Real Effective Exchange Rate) value, as inflows are expected to materialise in the coming days,” Saad Hashmey, Executive Director at BMA Capital, told Business Recorder.
The market expert said that with the expected revival of the IMF programme, Pakistan’s external gap remains funded, which will cushion current account deficit concerns. “Currency moves with sovereignty risk, thus being part of the IMF programme would reduce that risk,” he said.
Hashmey said that fiscal tightening measures taken by the government in the form of subsidies removal on petroleum and electricity would curb demand, which would translate into a decline in the import bill in the coming months.
“The rupee is expected to hover around the 200 level, but its future direction will be dictated by international oil prices,” he said.
Inter-bank market rates for dollar on Thursday
BID Rs 204.70
OFFER Rs 204.90
In the open market, the PKR remained unchanged for both buying and selling against USD, closing at 203 and 205, respectively.
Against Euro, the PKR gained 2 rupees for both buying and selling, closing at 210 and 212, respectively.
Against UAE Dirham, the PKR gained 80 paisas for buying and 70 paisas for selling, closing at 54.70 and 55.30, respectively.
Against Saudi Riyal, the PKR remained unchanged for buying while gaining 10 paisas for selling, closing at 54.30 and 54.70, respectively.
Open-market rates for dollar on Thursday
BID Rs 203
OFFER Rs 205