Despite progress in Pakistan-IMF negotiations, the rupee drops to a new low of 211.93
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  • months of uncertainty will be reduced with IMF clarification.
  • Against the US dollar, the rupee finishes today at an all-time low of 211.93.
  • According to market analysts, the rupee would temporarily benefit from the IMF’s successful outcome.

In early morning interbank trade on Wednesday, the Pakistani rupee finally broke its losing skid against the US dollar, rising more than Rs3. The “broad agreement” with the International Monetary Fund (IMF) plan was largely responsible for this.

The optimism was short-lived, nonetheless, as investors’ confidence was once again dampened by clarification regarding the deal with the Fund. Investors believed that the global lender had restarted the $6 billion initiative before learning that it remained on hold.

The Pakistani rupee lost 0.21 percent in the interbank market to settle at an all-time low of 211.93 versus the US dollar, according to the State Bank of Pakistan. The dollar reached a record high yesterday, rising sharply by Rs2.

The rupee’s value has been steadily declining for weeks before to the intraday optimism, which has mostly been linked to the nation’s growing import costs, diminishing foreign exchange reserves, and ambiguity surrounding the IMF program.

Pakistan and the Fund reached a “broad agreement” last night about the budget for the upcoming year.

Finance Minister Miftah Ismail spoke to a group of journalists, “We have sealed the budget for the fiscal year 2022–23 in collaboration with the IMF and the Fund will now discuss with State Bank of Pakistan on monetary goals.” Following the last round of negotiations with Nathan Porter, head of the IMF mission, the minister stated.

Despite falling short of a staff-level agreement, the broad accord might help calm markets and put an end to the four-month period of uncertainty that hurt the nation’s currency.

According to market analysts, Pakistan’s currency would temporarily benefit from this encouraging development.

Even though the rupee has taken a sigh of relief following the positive news flow, Pakistan-Kuwait Investment Group Head of Research Samiullah Tariq claimed that it may only recover approximately Rs2–3 against the dollar till the conclusion of the fiscal year.

The rupee has collectively depreciated by a staggering 34.52 percent (or Rs54.39) from the start of the current fiscal year (July 1, 2021) compared to the closing of the last fiscal year at Rs157.54.

For the past 13 months, the rupee has been on a downward trend. Compared to the all-time high of Rs152.27 set in May 2021, it has lost 39.18 percent (or Rs59.66) so far.

SBP denies claims that its foreign exchange reserves are running low

The central bank refuted rumors by claiming that it’s $8.9 billion in liquid foreign currency reserves are “fully useable” and have not run out.

The SBP’s answer followed reports that said the reserves had run out or were no longer useable, that the SBP had halted payments for imports, and that banks were out of dollars.

The SBP added that the information on the liquid foreign reserves, which were $8.99 billion, was disclosed on June 10. It was stated that those were “totally useable for all purposes” and did not contain gold reserves.

Read More: Budget for Baluchistan Has No Discrepancies, Claims Khetran

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