Pakistan rupee extended gains against the US dollar for the second straight week and recovered Rs1.64 (+0.96 percent). According to the State Bank of Pakistan, the US dollar opened at Rs171.65 in the interbank market on Monday last and closed at Rs170.01 on Friday, the last working day of the week. Within the open market, the rupee was traded at Rs171/173 per dollar during the week. During the last week, the rupee strengthened during the first three sessions, struggled on Thursday and remained flat on Friday. The rupee gained 36 paisas (+0.21 percent) on Monday, 75 paisas (+0.44 percent) on Tuesday and 57 paisas (+0.34 percent) on Wednesday. The Pakistani rupee snapped the six-day winning streak against the US dollar in the inter-bank market on Thursday with shedding 4 paisas (-0.02 percent). However, the Pakistani rupee remained firm against the US dollar on Friday and closed unchanged. The Kingdom of Saudi Arabia on October 26 announced support of $3 billion to Pakistan for building its foreign exchange reserves. This support is in addition to a $1.2 billion deferred oil facility to Pakistan to help its balance of payment issues. This supported the depreciating rupee, which had plummeted to 175.27 against the US dollar on October 26 and since then the local currency has recovered Rs5.26 during the last eight sessions. The expectation of resumption of $6 billion Extended Fund Facility by the International Monetary Fund (IMF) is another factor that is supporting the rupee. Adviser to the PM on Finance and Revenue, Shaukat Tarin said last week that Pakistan and the IMF will sign an agreement on the release of a $1 billion tranche of a bailout package this week. “All issues have been settled with the International Monetary Fund and an agreement will be signed this week,” Tarin said while talking to the media persons. Overall, the rupee depreciation during the fiscal year 2021-22 has been Rs12.59, while the local unit has shed Rs9.84 against the US dollar in the current year 2021. The central bank announced last week that its reserves increased by $52.9 million to $17,199.6 million. The updated data did not include a $3 billion Saudi deposit. However, huge import bill, widening trade deficit and external payments are still a major threat for the stability of the local currency. The import bill registered a growth of 65.15 percent to $25.06 billion during July-October 2021, compared to $15.17 billion in the same period of the last fiscal year. Similarly, the exports of the country also grew 25 percent to $9.44 billion during the period under review, compared to $7.57 billion during the same period of the last fiscal year. Since Pakistan is a net importer of various commodities and other finished products, the international price hike would further escalate the demand for the dollar, which would also result in weakening of the local currency.