KARACHI: The Pakistani rupee surged to a five-week high, reaching Rs278.32 against the US dollar in the inter-bank market. The currency appreciated by Rs0.10, bolstered by expectations of substantial foreign investments and new external loans. Data from the State Bank of Pakistan (SBP) indicates this marks the third consecutive day of gains, with the rupee strengthening by a total of Rs0.34.
In the open market, the Exchange Companies Association of Pakistan (ECAP) reported that the local currency remained stable at Rs280 per dollar for the sixth consecutive working day.
The rupee’s recent appreciation follows Saudi Arabia’s interest in acquiring a 15% equity stake in Pakistan’s Reko Diq project and contributing to infrastructure development near the site. Market sentiment was further uplifted by assurances of $4 billion in new foreign commercial loans from Middle Eastern banks, expected to materialize by the next fiscal year.
These developments are critical for Pakistan to meet the International Monetary Fund’s (IMF) requirement to close a $2 billion financing gap, a key condition for accessing the $7 billion IMF loan programme.
Despite these positive trends, the currency market has largely overlooked that Pakistan is still absent from the IMF Executive Board’s agenda for its upcoming meeting in early September. The government had earlier assured that the Fund would approve the $7 billion programme in September, following a delay from August. Moreover, the government’s decision to extend the due diligence deadline for Pakistan International Airlines’ (PIA) privatisation, speculated to be a prerequisite for the new loan programme, adds to the uncertainty. Any further delay in securing final IMF approval could put downward pressure on the rupee.
