Rupee gains 0.3pc against dollar as recovery spree continues

Author: TLTP

Pakistani rupee maintained its recovery spree against the US dollar for the third consecutive session and appreciated by 60 paisa (+0.30 percent) on Tuesday.

The State Bank of Pakistan said in a statement that the dollar opened at Rs199.06 in the interbank market and closed at Rs198.46. Within the open market, the rupee was traded at 199.5/200.5 per dollar nagainst 200.50/201.50 a dollar a session earlier.

The local unit has gained Rs3.55 against the US dollar in the last three sessions. The Pakistani rupee reversed the trend of back-to-back losses against the US dollar after falling for seventeen consecutive sessions. Prior to Friday’s gain, the local currency set 13 consecutive all-time ,new lows. Overall, the rupee has depreciated by Rs40.97 against the US dollar during the ongoing fiscal year 2021-22 and Rs21.55 during the current year 2022.

Pakistan increased petroleum prices last week in a bid to resume the International Monetary Fund (IMF) loan programme. The action is expected to be followed by a revival of the multibillion-dollar loan programme by the IMF, which has been on an eleven-month hold, while Pakistan needs over $7 billion to repay the foreign debt and finance the current account deficit over the next months.

Analysts believe that the move helped ease some pressure on the local unit and a sustained IMF engagement with Pakistan would open up the flow of funds from China, Saudi Arabia, the World Bank, Asian Development Bank and the International Finance Corporation. Finance Minister Miftah Ismail’s assurance that the deal with the Fund will be finalised this month further supported the uptrend. However, dealers believe that the markets may remain volatile as any fresh development can change the sentiment on a day-to-day basis. China and Pakistan have reaffirmed their support for each other’s “core interests and major concerns” while vowing to further enhance economic and defence cooperation, while the Gulf Cooperation Council (GCC) has also agreed to explore further avenues to enhance bilateral trade and economic ties with Islamabad. The likely inflows will help improve the county’s foreign exchange reserves and improve its capacity to make international payments. The official foreign reserves have fallen to a critically low level of six-week import cover at $10.08 billion.