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Pakistani Rupee Holds its Ground Against US Dollar

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Rizwan Shah
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Pakistani Rupee Holds its Ground Against US Dollar

The Pakistani Rupee's relentless climb against the US dollar prevails, marking the sixth consecutive session of appreciation in the inter-bank market. As per the recent figures released by the State Bank of Pakistan, the dollar has plummeted by 15 paisas in the interbank market. The exchange rate for one US dollar now stands at 284.38 Pakistani Rupees, down from the previous day's close at 284.53 Pakistani Rupees, reflecting a depreciation of 44 paisas.

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The Impact of the IMF Programme

Currently, Pakistan is under a $3 billion IMF programme, scheduled to conclude in the second week of April 2024, with nearly $1.8 billion yet to be disbursed. The Fund released the first tranche of $1.2 billion in July. The anticipation of the next IMF tranche, likely to be approved in the first week of December 2023, is expected to help stabilize the Rupee in the near term. This expectation is further bolstered by the forthcoming inflows from bilateral and multilateral creditors.

The Dollar's Decline in the Open Market

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Interestingly, the open market is also witnessing a similar trend. According to the Exchange Companies Association, the dollar's rate in the open market has slid by 25 paisas, resulting in a closing rate of 285.25 Pakistani Rupees on December 5, 2023. The Rupee gained 25 paisas for both buying and selling against the USD, with closing values at 282.25 and 285.25, respectively.

Economic Factors Fuelling the Rupee's Rise

The Pakistani Rupee's surge is underpinned by an enhanced supply of foreign currency in the system. The Rupee's uptrend is further reinforced by the narrowing trade gap, down 32 percent year-on-year to $1.89 billion in November, and an increase in the foreign exchange reserves held by the State Bank of Pakistan, up by $77 million to $7.257 billion in the week ending November 24. Nonetheless, recent developments at the IMF have sparked questions about the timing of the next payout of roughly $700 million.

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