Pakistani currency maintained its uptrend for the second consecutive working day, gaining another 0.35% (or Rs0.70) to a new one-week high at Rs199.06 against the US dollar in the inter-bank market on Monday.
The currency had closed at Rs199.76 against the greenback on Friday, according to Pakistan’s central bank data.
The currency resumed the day’s trade at Rs199.76 and hit an intra-day low of Rs201 at one point. It has cumulatively recovered 1.46% (or Rs2.95) in the past two working days.
The recovery came on high expectations about the revival of International Monetary Fund (IMF) loan programme after meeting its condition of increasing petroleum product prices for the end-consumers.
Finance Minister Miftah Ismail announced on Saturday that the country expected the resumption of IMF programme in June. The resumption of the programme means the IMF will release the next loan tranche of around $1 billion soon.
Consequently, the country’s capacity for international payments will improve.
Experts said that the recovery of the rupee came following increase in the supply of foreign currency in the market. Exporters apparently sold their dollars keeping in view the prospects of further recovery in the rupee’s value.
However, the continuous increase in international oil prices has proved to be a negative development for the rupee, as the country heavily relies on imported fuels to meet domestic demand.
The benchmark Brent crude price stood above $121 per barrel in the global market compared to $110 a few days ago.
Earlier, the country’s default risk – measured by the currency default swap (CDS) – soared five times to 1,549 points on the global index by Thursday due to its weakening payment capacity.
Pakistan’s CDS index usually hovers around 300 points during the days of economic stability. In the prior 15 consecutive working days, the rupee devalued 8.78% (or Rs16.32) to an all-time low at Rs202.01 on May 26 compared to Rs185.69 on April 30.
The finance minister has said that the country required foreign financing worth $36-37 billion to run the economy in the next fiscal year.
Published in The Express Tribune, May 31st, 2022.
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