Islamabad: On Friday, the Pakistani rupee gained Rs2 against the US dollar in the interbank market, which analysts attributed to an increase in central bank forex reserves and expectations of an imminent agreement between the government and the International Monetary Fund (IMF).
According to the Exchange Companies Association of Pakistan (ECAP), the rupee was trading at Rs280.30 at 11:15am today, following a 1.13% decline the previous day. The dollar closed at Rs282.30, according to the State Bank of Pakistan.
ECAP Chairman Malik Bostan stated that if the government finalizes the deal with the IMF, the dollar is expected to drop to Rs270. He added that stabilizing foreign exchange reserves have eased the pressure on the rupee. Zafar Paracha, the general secretary of ECAP, believes that the rise in SBP reserves and inflow from China has changed the market trend, leading people to cash in their payments. However, Paracha emphasized the need for a consistent trend in the dollar rate as instability creates a negative perception of the country.
The State Bank of Pakistan reported that its reserves increased by $487m to $4.301bn during the week ending March 3, while total liquid foreign reserves stood at $9.754bn. The SBP’s reserves have experienced a significant decline over the past year, dropping from more than $17bn in February 2022 to less than $3bn in early February this year. However, recent Chinese assistance of $1.2bn has pushed the reserves higher to $4.3bn. Finance Minister Ishaq Dar has stated that the country is “very close” to signing the staff-level agreement with the IMF, but the lender has asked Pakistan to arrange $7bn for debt servicing during the current fiscal year before releasing the $1.1bn tranche.
