Dollar to PKR: Rupee continues to roar higher for ninth consecutive session

KARACHI: Pakistani rupee held firm control in the interbank market for the ninth successive trading session as the supply of the US dollar increased consistently compared to its demand despite shrinking foreign exchange reserves.

The rupee further gained Rs3.38 to trade at Rs215.50 against the US dollar in the interbank market during intra-day trade on Friday.

Exporters are selling dollars in the market amid the rupee’s appreciation. Earlier, they withheld dollar supplies in anticipation of more depreciation of the local currency.

The rupee closed at Rs218.88 on Thursday, according to the central bank data. The currency has regained over 9% (or nearly Rs21) in the past nine consecutive trading sessions.

The uptrend is driven by growing optimism about the revival of a suspended International Monetary Fund (IMF) bailout package later this month as the government has successfully completed the requirements for the release of $1.17 billion in funds.

Prior to that, the rupee nosedived 13.75% (or Rs31.31) for 10 consecutive working days to an all-time low at Rs239.94 against the greenback on July 28.

News reports that Pakistan will receive a letter of intent from the Washington-based lender before this weekend sparked hopes of its securing the IMF funding soon, which helped the rupee make fresh gains, given the perception the IMF’s endorsement is key to unlocking other foreign inflows and rolling over bilateral and multilateral loans.

The comforting statements from the government and the State Bank of Pakistan also lifted the rupee sentiment.

Finance Minister Miftah Ismail in a recent interview with CNBC said Pakistan had successfully averted a Sri Lanka-like situation.

Acting Governor State Bank of Pakistan Dr Murtaza Syed is confident that the country would soon bridge its external financing gap of $4 billion with the help of friendly countries under the IMF conditions amid dwindling foreign reserves.

Analysts said the progress on the IMF programme front diluted concerns over the prospects of the country’s default on its foreign debt payments. Staying in the IMF programme is necessary to keep the economy afloat.

The IMF board is expected to review the staff-level agreement with Pakistan, reached last month, at its meeting due on August 24. The board is likely to approve the release of the next two loan tranches. It will also consider increasing the size of the loan facility to $7 billion, up from the $6 billion agreed in 2019.