Pakistani rupee held ground against the US dollar last week and gained 0.57 percent (Rs1.06) after shedding 2.86 percent (Rs5.20) in the preceding week.
The rupee recovered from 186.75 to Rs185.69 against the American currency in the interbank market last week. However, within the open market, the rupee suffered from 185/186 per dollar to 185.50/187 a dollar during the week.
The rupee continued to rise on the back of improvement in the supply of the greenback as an increase in remittances for Ramzan lent support to the domestic currency. The market remained optimistic about results of recent talks between the government and the International Monetary Fund (IMF) to revive the loan package, which can provide more stability to the currency market.
Overall, the rupee has depreciated by Rs28.26 against the US dollar during the ongoing fiscal year 2021-22 and Rs9.24 during the current year 2022.
According to experts, the rupee witessed some respite on the back of limited trading activity. However, the gloomy macros will continue to put pressure on the local unit. They said though there is stress on the economy, yet some stability is visible. Despite better exports, the current account deficit has surged to alarming levels and in order to address this challenge, there is a need to look at the agriculture sector and curtail needless imports, they added.
Currency dealers believe that the IMF statement, saying the Fund mission will visit Pakistan in May to resume discussions over policies for completing the seventh review has helped sentiment, as did the news of extending the stalled programme by up to one year and increasing the loan size to $8 billion from $6 billion. Traders and markets are looking at the IMF as progress with the Fund instils investor confidence in the economy, stabilises Pakistan’s foreign exchange reserves, and unlocks funding from other international financial institutions.
Besides IMF programme revival, expected $2.4 billion rollover from China and other foreign inflows would provide much-needed support to the balance of payments and the currency as well.
The foreign exchange reserves held by the central bank decreased 3 percent on a weekly basis and were recorded at $10,558.2 million on April 23, down by $328 million compared with $10,885.7 million on April 16. According to the central bank, the decrease came due to external debt and other payments. Overall liquid foreign currency reserves held by the country stood at $16,668.2 million. Net reserves held by banks amounted to $6,110 million.