Daily Times

Rupee made gains against the US dollar for the fourth week in a row and improved by Rs1.10 in the interbank market, while the local unit improved by Re1 in the open market.

According to details, the rupee opened at 284.97 against the greenback in the interbank market on Monday last and closed at 283.87 on Friday, registering a rise of 0.39 percent week-on-week. The rupee improved by 40 paisas, Rs1.13 and 53 paisas in the preceding three weeks. The local unit has improved by Rs3.16 during the previous four weeks. Similarly, the rupee improved by Rs4.42 during the current fiscal year 2023-24. However, the rupee depreciated by Rs53.03 in the current year. The rupee shed Rs3.69 against the US dollar in November after gaining Rs6.26 (+2.23 percent) against the greenback in the month of October. The currency surged more than 6 percent in September to become the top performer in the world.

Similarly, the local unit gained Re1 against the greenback in the open market and closed the week in the range of 282-285 after opening the week at 283-286 on Monday.

The International Monetary Fund’s (IMF) executive board will meet on January 11 to consider the final approval to disburse the next $700 million tranche from its current loan programme with Pakistan. Pakistan has been facing an acute balance of payment crisis, with its foreign exchange reserves diminished, along with historically high inflation and an unprecedented currency devaluation.

The country’s foreign exchange reserves held by the State Bank of Pakistan (SBP) decreased by $237 million on a weekly basis, clocking in at $7.02 billion as of December 1. Despite this decrease, mostly owing to loan repayments, optimism abounds as the expected IMF tranche next month is projected to increase reserves.

On the other hand, the workers’ remittances dropped by 8.63 percent month-on-month in November to $2.25 billion as compared to $2.46 billion in October. However, on a yearly basis, workers’ remittances increased by 3.56 percent as compared to $2.17 billion in the same month last year. During the first five months of the current fiscal year 2023-24, the total remittances stood at $11.05 billion as compared to $12.32 billion in the same period of the last financial year, depicting a decline of 10.33 percent.

While the rupee is expected to remain range bound till the end of the year, it will be strongly challenged due to backlog of import and profit payments, REER [real effective exchange rate] expected to cross the 100 per level and to rise materially in the over-valued territory after 30 months, and finally, due to fate of IMF board approval, according to experts. The central bank will announce the monetary policy on December 12. In the last Monetary Policy Committee (MPC) meeting on October 30, 2023, the committee had decided to keep the interest rate unchanged at 22 percent.