The Pakistani rupee experienced a significant gain of Rs5 against the US dollar on Monday, which experts attribute to the recently reached stand-by agreement with the International Monetary Fund (IMF). The Forex Association of Pakistan reported that the rupee had strengthened to Rs285 in the open market, coinciding with the stock market surpassing the 2,000 mark. As it was a bank holiday, the interbank rate was not available.
Malik Bostan, Chairman of the Exchange Companies Association of Pakistan (ECAP), expressed optimism about the positive outcomes resulting from the finalization of the IMF deal. He anticipated that the dollar rate would decline once the interbank market reopened on Tuesday. He further predicted that the greenback value would decrease to Rs275 in the coming days.
Read: Bullish Revival at Pakistan Stock Exchange following IMF Agreement
Bostan also expected that Pakistan, following the IMF agreement, would receive financial assistance from other global institutions, reducing the demand for the dollar.
Zafar Paracha, ECAP General Secretary, noted that exchange companies were closed due to the bank holiday. He predicted that, with the signing of the IMF agreement and the anticipation of grants from other countries, the dollar would depreciate by an additional Rs5 the following day.
Paracha emphasized the need to assess how effectively the dollar surge could be controlled in the long run, calling on the government to prioritize this. He warned that Pakistan would continue to face economic challenges without significant spending cuts and additional measures to ensure the rupee’s stability.
Komal Mansoor, Head of Strategy at Tresmark, stated that there was anticipation for the opening of the interbank market. She explained that money changers could sell their forex inventory to banks, which technically prevents the open market rate from going below the interbank rate. She estimated that the interbank rate, if open, would be around Rs276 against the dollar based on information from multiple sources.
Pakistan recently secured a $3bn short-term financial package from the IMF, providing much-needed relief to its economy as it faces the risk of default. This funding exceeded expectations over nine months as Islamabad awaited the release of the remaining $2.5bn from a $6.5bn bailout package agreed upon in 2019, which expired the previous week.
