The rupee continued to recover in the interbank market on Monday, closing at Rs277.92 per dollar, data shared by the State Bank of Pakistan showed.
This equates to an appreciation of 54 paise, or 0.19 per cent, from Friday’s close of Rs278.46 a dollar.
Tresmark’s Head of Strategy Komal Mansoor said the rupee appreciated on market expectations that a staff-level agreement (SLA) would be signed with the International Monetary Fund (IMF) by the end of this week.
“We have implemented all reforms [asked for by the IMF]. One of the IMF’s conditions was reserve building. We saw some reserve building last week,” she said, referring to the Industrial and Commercial Bank of China Ltd’s rollover of a $1.3 billion loan.
The facility will be disbursed in three instalments. The first one of $500 million has been received by the State Bank of Pakistan, Finance Minister Ishaq Dar had said on Saturday.
Pakistan has previously received a $700m loan from China to help boost its forex reserves.
“The rupee seems more settled because the IMF [deal] seems probable,” Mansoor added.
Meanwhile, Exchange Companies Association of Pakistan Secretary General Zafar Paracha said the dollar rate would come down to Rs260-265 once a deal was signed with the IMF as it would also unlock inflows from friendly countries.
He added that the rupee had depreciated last week also because of the prevailing political uncertainty and the upcoming elections in Punjab and Khyber Pakhtunkhwa. “Once [political] matters settle, things will start looking up,” he commented.
Pakistan is in the midst of a severe economic crisis, with its reserves depleting to $3.8bn, not enough to cover even a month’s import bill. In such a situation, the country urgently needs to sign a deal with the IMF that would not only release $1.2bn but also unlock funding from friendly countries and other multilateral lenders.
The government is set to resume virtual talks with the IMF today to finalise revenue and expenditure figures for the next four months.
The IMF team, led by its Pakistan mission chief Nathan Porter, held talks with finance ministry officials for a couple of days, followed by a last meeting with tax officials on Friday to review the impact of prior actions in terms of revenue generation and their impact on bridging fiscal gaps.
Both sides will also fine-tune the language of a draft Memorandum of Economic and Fiscal Policies (MEFP), generally called the staff-level agreement, a government official had told Dawn, adding that the text of the agreement would be discussed in detail from Monday onwards.
