Rupee extends gains, closes at 218.75 against US dollar

Pakistan's rupee strengthened further against the US dollar following revival of the much-awaited International Monetary Fund (IMF) programme, appreciating 0.63% in the inter-bank on Wednesday.

As per the State Bank of Pakistan (SBP), the rupee closed at 218.75 after appreciating Rs1.37 or 0.63% against the greenback. During intra-day trading, the rupee appreciated to as high as 218.

On Tuesday, the rupee had closed at 220.12 after appreciating Rs1.8 or 0.82% against the greenback.

The appreciation comes as market sentiments improved following the IMF Executive Board's approval for the disbursement of $1.1 billion for the seventh and eighth tranches on Monday.

Moreover, the spread in rates between the inter-bank and open market thinned drastically as well as the IMF programme revival brought an end to "speculation" that had caused the gap to widen by at least Rs6-10 in the past two weeks.

Market analysts said that a drop in commodity prices is also good news for Pakistan, which is a net importer.

“The drop in oil prices bodes well for Pakistan. Moreover, marginal drop in coal prices has also been seen,” said Shuja Qureshi, an analyst, in a video message.

Globally, the dollar remained firm on Wednesday as stronger-than-expected U.S. economic data and hawkish Federal Reserve comments pointed to higher interest rates, while rate-hike bets in Europe also have the common currency clinging on above parity.

The U.S. dollar index, which measures the greenback against a basket of currencies, hovered at 108.64.

Meanwhile, oil price, a key determinant of currency parity, continued to slide on Wednesday on investor worries about the ailing state of the global economy, the prospect of key central bank interest rate hikes, and increased restrictions to curb COVID-19 in China.

Inter-bank market rates for dollar on Wednesday

BID Rs 218.50

OFFER Rs 219.50

Open-market movement

In the open market, the PKR gained 3 rupees for both buying and selling against USD, closing at 217 and 219, respectively.

Against Euro, the PKR gained 6 rupees for both buying and selling, closing at 215 and 217 respectively.

Against UAE Dirham, the PKR gained 2 rupees for both buying and selling, closing at 59 and 59.50, respectively.

Against Saudi Riyal, the PKR gained 1.20 rupees for both buying and selling, closing at 57.50 and 58, respectively.

Open-market rates for dollar on Wednesday

BID Rs 217

OFFER Rs 219