After showing significant improvement throughout the day, the rupee closed lower in the inter-bank market, depreciating for the ninth consecutive session against the US dollar on Wednesday.
During intra-day trading, the rupee appreciated to the 209-mark amid reports that Pakistan and the International Monetary Fund (IMF) made progress on budget measures and moved closer to reviving the stalled bailout programme.
However, the euphoria was short-lived as the market soon incorporated the finer points, including the fact that the IMF has called for additional policy actions before reviving the stalled bailout programme.
As a result, the rupee closed at 211.93 against the US dollar, after a depreciation of 0.21% or Re0.45 on Wednesday.
Pakistan, IMF make 'progress on FY23 budget', move closer to programme revival
While Pakistan and the IMF made progress on the budget measures for 2022-23, the programme has yet to revive as Islamabad has committed prior actions.
"Discussions between the IMF staff and the authorities on policies to strengthen macroeconomic stability in the coming year continue," IMF Resident Representative in Pakistan Esther Perez Ruiz told Business Recorder.
"Important progress has been made over the FY23 budget."
The development is short of a staff-level agreement, and remains contingent on Pakistan meeting additional policy actions to "strengthen macroeconomic stability".
Pakistan entered the IMF programme in 2019, but only half the funds have been disbursed to date as Islamabad struggled to keep targets on track.
The last disbursement was in February and the next tranche was to follow a review in March, but the government of ousted prime minister Imran Khan introduced costly fuel price caps which threw fiscal targets and the programme off track.
Since then, Pakistan has started a tough economic path to revive the IMF programme, including hiking fuel prices and energy tariffs, but a staff-level agreement has yet to be reached.
Open-market movement
In the open market, the PKR gained 3.50 rupees for both buying and selling against USD, closing at 210 and 212, respectively.
Against Euro, the PKR gained 4 rupees for both buying and selling, closing at 220 and 222, respectively.
Against UAE Dirham, the PKR gained 1.50 rupees for both buying and selling, closing at 57 and 57.50, respectively.
Against Saudi Riyal, the PKR gained 1.40 rupees for buying and 1.30 rupees for selling, closing at 55.50 and 56, respectively.
Open-market rates for dollar on Wednesday
BID Rs 210
OFFER Rs 212