KARACHI, June 22(ABC): The Pakistani rupee finally snapped its losing streak against the US dollar on Wednesday, gaining nearly Re1 in early morning interbank trade, mainly due to the ‘broad agreement’ with the International Monetary Fund (IMF) programme.
The rupee reversed some of the gains but still appreciated to Rs211 (as of 10:42am) against the dollar from Tuesday’s close of Rs211.48. Yesterday, the greenback was at an all-time high, appreciating by a sharp Rs2.
The development comes after weeks of persistent declines in the rupee’s value, which has been largely attributed to the country’s rising import bill, depleting foreign exchange reserves and uncertainty regarding the IMF programme.
Last night Pakistan announced a “broad agreement” with the Fund on next year’s budget.
“We have locked the budget for the fiscal year 2022-23 in consultation with the IMF and now the Fund will consult with the State Bank of Pakistan on monetary targets,” Finance Minister Miftah Ismail told a group of journalists. The minister spoke after having a final round of talks with IMF Mission Chief Nathan Porter.
Although the broad agreement is short of a staff-level pact, it may help soothe markets and end a four-month-long period of uncertainty that took a heavy toll on the country’s currency.
Market experts opined that this positive breakthrough will give temporary respite to Pakistan’s currency.
Pakistan-Kuwait Investment Company Head of Research Samiullah Tariq said that although the currency has breathed a sigh of relief after the positive news flow, it may only recover around Rs2-3 against the greenback till the end of the fiscal year.
SBP rejects rumours of forex reserves drying up
Meanwhile, the central bank rebutted rumours, saying that its liquid foreign exchange reserves of $8.9 billion have not dried up and are “fully usable”.
The SBP’s response came after reports implied that the reserves have dried up or are not usable, that the SBP has stopped import payments and that banks have run out of dollars.
The SBP noted that on June 10, it released details of the liquid foreign reserves, which stood at $8.99 billion. It added that those did not include gold reserves and are “fully usable for all purposes”.
