On Thursday morning, Pakistan’s currency has seen an improvement of Rs2.14, reaching Rs275.34 against the US dollar in the interbank market. This improvement followed the International Monetary Fund’s (IMF) executive board’s final approval of a $3 billion loan program for Pakistan.
Early trading saw the rupee make an impressive recovery of Rs5.47 against the dollar, peaking at Rs272. However, it was unable to maintain this surge. Despite this, the rupee has seen a positive trend for the third consecutive workday, leading to a cumulative rise of approximately Rs4 to Rs275/$.
Boosting Foreign Exchange Reserves
The IMF executive board has sanctioned the immediate release of the first tranche of $1.2 billion to Pakistan. Simultaneously, the UAE deposited an additional $1 billion into the State Bank of Pakistan (SBP) on Wednesday, with Saudi Arabia lending $2 billion the previous day. These capital inflows from supportive countries have bolstered the country’s foreign exchange reserves by $3 billion, further supporting the rupee’s stabilization.
Before these inflows, Pakistan’s FX reserves stood at a mere $4.4 billion, barely sufficient to cover a month’s imports. However, these new capital inflows have enhanced the nation’s ability to repay upcoming foreign debt on time.
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Industry experts predict that the currency will stabilize between Rs275 and Rs280 against the dollar in the short term due to the high demand for foreign currency in the domestic economy. Pakistan is set to reopen imports gradually under the IMF’s new conditions, which is expected to result in a surge in dollar demand.
