The rupee gained 27 paisa against the U.S. dollar in interbank trade on Thursday, which the government applauds as a result of its preparations for the release of IMF loan tranches (IMF).
According to the Forex Association of Pakistan (FAP), the value of the rupee increased by Rs1.50 from the previous day’s close of Rs205.40 to Rs203.90 at 1 pm.
The FAP closing rate for the previous session, Rs205.12, was higher than the SBP rate, Rs205.12.
Thursday evening’s closing interbank dollar rate was Rs204.85, an increase of 0.13 percent.
Malik Bostan, chairman of the FAP, stated that the rupee has been recovering significantly against the dollar in recent days due to expectations that the IMF will soon offer around $2 billion in financing.
Mettis Global, a web-based financial data and analytics platform, also ascribed today’s rupee appreciation to the government’s efforts to secure the release of loan tranches from the IMF.
The newspaper reported, however, that analysts believe this rise in the rupee’s value was “temporary due to a continuous bullish advance of oil prices on the global market.”
By the government’s commitment to the IMF, the National Assembly ratified the finance law for the upcoming fiscal year on Wednesday (yesterday), including considerable changes to taxation and charges on petroleum products.
Pakistan received the Memorandum of Economic and Fiscal Policies (MEFP) from the International Monetary Fund (IMF) on Tuesday for the seventh and eighth reviews of its $6 billion loan program, which has been suspended since April.
Before the IMF board considers Pakistan’s case for approval and the subsequent distribution of funds, the MEFP outlines certain preparatory activities that would be required for implementation.
According to the MEFP, Pakistan must take at least two additional “prior actions” to get the two combined tranches by the end of July or the beginning of August. The federal budget was approved by the IMF and handed to the National Assembly on June 24. The provincial governments have inked an agreement to donate a cash surplus of Rs750 billion to the federal government.
Migration of Chinese citizens
Boston also attributed the rupee’s appreciation to a Chinese consortium of banks crediting the SBP’s account with a $2.3bn loan last week.
He predicted that the dollar will fall to as low as 200 rupees in the first week of the new fiscal year, after reaching a high of 212 rupees on the interbank market.
As a result of the stronger rupee, exporters have begun remitting their export earnings to Pakistan, hence increasing the market’s dollar supply.
In addition, the majority of this year’s Haj pilgrims who had been purchasing dollars had completed their preparations, resulting in a significant decline in dollar demand, he said.
