Business desk
The Pakistani rupee is expected to continue its upward trajectory on renewed optimism that the International Monetary Fund (IMF) bailout package will resume by the end of this month and improved economic indicators, say traders.
The local unit appreciated around 3% against the US dollar in three trading sessions this week. It concluded at 221.91 per dollar on Wednesday and finished at 2015.49 on Friday. The local unit maintained its rising trend, tracking gains in the local equity market.
Improvement in the supply of the greenback due to export-related proceeds, fall in global oil prices and stability in the country’s political outlook, and easing US inflationary pressures supported the rupee.
The prices of Pakistan’s dollar-denominated sovereign bonds also started to recover helped by the ease in default fears. The country’s five-year currency default swap declined to 17.44% on August 10 from its peak of 34.86% on July 20.
However, the foreign exchange reserves have been draining constantly. The foreign reserves held by the State Bank of Pakistan fell by $555 million to $7.83 billion as of August 5 on the back of increased external debt payments.
“We expect the rupee to gain further in the coming sessions as sentiment is positive on hopes of receiving IMF funds by the end of August. The IMF money will help stabilise the economy, shore up reserves and lend support to the rupee,” said a currency trader, The News reported.
To approve a rescue package for Pakistan, including the disbursement of approximately $1.18 billion before the end of the current month, the IMF called a meeting of its executive board on August 29.
The action follows the completion of the $4 billion in bilateral financing from four friendly nations and would open the door for an immediate transfer from the IMF, which is anticipated to be in Pakistan’s account by the close of business on August 31.
