The Pakistani rupee started showing signs of recovery on Thursday as it gained Rs2.73 against the US dollar to reach Rs209.20 in the inter-bank market before midday, eventually breaking the two-week-long downward streak.
The domestic currency had closed at Rs211.93 on Wednesday.
The significant recovery of the local currency follows headway with the International Monetary Fund (IMF) after the resumption of its $6 billion loan programme.
Furthermore, China rolled over a loan worth $2.3 billion which had been pending for the past four months.
Under the new circumstances, Pakistan’s foreign exchange reserves improved to over $11 billion, strengthening the country’s capacity to make international payments.
Moreover, international oil prices decreased to under $110 per barrel in world markets compared to over $120 per barrel a few days ago. The drop in global oil price is another positive sign for Pakistan, as it heavily relies on imported energy to meet local demand.
Earlier, the domestic currency had lost 34% (Rs55) in the past year to an all-time low of Rs211.93 on Wednesday compared to Rs157.54 against the greenback on June 30, 2021.
Pakistan on Tuesday announced a ‘broad agreement’ with the IMF regarding next year’s budget which had seen its size increase to Rs9.9 trillion, as the government agreed to reintroduce tax on people earning up to Rs100,000 and petroleum levy from July 1.
The two sides decided to gradually impose a Rs50 per litre petroleum levy — the first tranche of Rs10 per litre from July and then Rs5 per litre from August onwards until it reaches the maximum threshold of Rs50 per litre by March 2023.
“We have locked the budget for the fiscal year 2022-23 in consultation with the IMF and now the Fund will consult with the State Bank of Pakistan on monetary targets,” Finance Minister Miftah Ismail told journalists.