IMF deal boosts rupee for second day

KARACHI: The rupee strengthened for a second consecutive day on Friday, buoyed by optimism after the International Monetary Fund reached a staff-level agreement with Pakistan that would unlock $700 million in financing.

The rupee rose 0.31 percent to 286.50 per dollar in the interbank market, while it gained 50 paisas to close at 288.25 in the open market.

The currency was supported by positive sentiment arising from the IMF deal, which is subject to approval by the lender's executive board, and the caretaker finance minister's hint at a new loan programme after elections, analysts and dealers said.

"PKR is appreciating due to positive sentiment arising out of staff-level agreement with the IMF. Going forward, if the planned flows materialise, the PKR would remain stable," said Samiullah Tariq, the head of research at Pak-Kuwait Investment Company.

The minister Shamshad Akhtar's remarks come a day after the global lender agreed to a loan tranche under an existing bailout programme. Akhtar said Pakistan needs to continue with the IMF as its economy is still fragile and the country will possibly seek another loan.

"The positive response from the IMF review has led to optimistic sentiment, which has contributed to the rupee's recent surge. Meeting the programme targets served as evidence that the country is resolutely on the path of recovery, which was crucial," said a currency dealer.

“Exporters are going back to the market to sell dollars in the hopes that the rupee will appreciate more over the coming days, which has caused the market's inflows to start improving. Better supply and an optimistic sentiment bolster the rupee.”