KARACHI: The rupee is expected to maintain modest gains versus the dollar in the coming week due to positive sentiments surrounding the economy after Pakistan received over $1 billion from the International Monetary Fund as the first tranche of a $7 billion loan, dealers and analysts said.
The local currency saw a minor increase versus the US dollar in the interbank market this week. While the rupee closed at 277.86 against the dollar on Monday, it showed some increases and closed at 277.63 on Friday.
The IMF’s executive board on Wednesday approved the $7 billion, 37-month Extended Fund Facility.
“We think that the new, long-term IMF programme will boost investor confidence in the economy even more. Foreign exchange reserves will rise rapidly as a result of the IMF’s payment, stabilizing the rupee and allaying fears about repaying foreign debt,” a currency dealer said.
“We anticipate that the rupee will continue to strengthen slightly versus the dollar over the coming week,” the dealer added.
The SBP’s foreign exchange reserves stood at $9.53 billion as of September 20.
The IMF, in its new statement issued on Saturday, said that the new programme will require sound policies and reforms to support the authorities’ ongoing efforts to strengthen macroeconomic stability, address deep structural challenges, and create conditions for a stronger, more inclusive and resilient growth
“Continued strong financial support from Pakistan’s development and bilateral partners will also be critical for the programme to achieve its objectives,” it said. “Pakistan has taken key steps to restoring economic stability with consistent policy implementation under the 2023-24 stand-by arrangement (SBA),” the IMF said. Growth has rebounded supported by activity in agriculture, while inflation has receded significantly, falling to single digits, amid appropriately tight fiscal and monetary policies.
A contained current account and calm foreign exchange market conditions have allowed the rebuilding of reserve buffers.
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