ISLAMABAD: The Pakistani rupee surged by Rs5 against the US dollar on Monday, with experts attributing the currency’s gains to the recently reached stand-by agreement with the International Monetary Fund (IMF).
According to the Forex Association of Pakistan, the rupee appreciated to Rs285 in the open market, coinciding with the stock market crossing the 2,000 mark. As it was a bank holiday, the interbank rate was not available.
Malik Bostan, Chairman of the Exchange Companies Association of Pakistan (ECAP), expressed optimism about the positive outcomes of finalizing the IMF deal. He anticipated that the dollar rate would continue to decline once the interbank market opened on Tuesday, and he further projected the value of the greenback to decrease to Rs275 in the coming days.
Significance of IMD Deal for Pakistan
Bostan emphasized that, following the IMF agreement, Pakistan could potentially receive financial assistance from other global institutions, which would decrease the demand for the dollar. This, in turn, would contribute to the rupee’s strengthening.
Zafar Paracha, the General Secretary of ECAP, highlighted that the closure of exchange companies due to the bank holiday influenced the current situation. He predicted that when the market resumed, the dollar could depreciate by an additional Rs5.
Paracha emphasized the need for assessing long-term stability and controlling the dollar surge effectively. He stressed that the government should prioritize this aspect and implement measures, including spending cuts, to address the country’s economic problems and maintain rupee stability.
Komal Mansoor, Tresmark’s Head of Strategy, mentioned the anticipation surrounding the opening of the interbank market. She explained that money changers could sell their forex inventory to banks, preventing the open market from going below the interbank rate. Mansoor estimated the interbank rate to be around Rs276 against the dollar based on multiple sources.
Pakistan recently secured a $3 billion short-term financial package from the IMF, providing much-needed relief to the economy as it faces the risk of default. The funding, spread over nine months, exceeded expectations and came after the expiration of a $6.5 billion bailout package agreed upon in 2019.
