Despite no deal with IMF, rupee ends with gains against US dollar

The Pakistani rupee registered a gain against the US dollar, appreciating 0.46% in the inter-bank market on Friday even as expectations that a deal would be finalised with the IMF to revive its bailout programme fell flat.

As per the State Bank of Pakistan (SBP), the currency closed at 269.28 against the US dollar, an increase of Rs1.23. The currency has depreciated by 23.2% during the ongoing fiscal year against the greenback.

Talking to Business Recorder, Saad Khan, Head of Research at IGI Securities, said Ishaq Dar’s statement that the government and IMF mission agree on a majority of things was “a good factor”.

“Despite no deal, everything seems to have sailed smoothly, which was reflected in rupee respite,” said Khan.

He added that the quantum of additional taxes agreed with the IMF i.e. Rs170 billion was far less than what was being reported. “This was taken as another positive indicator by the market,” he added.

The rupee had maintained an upward momentum against the US dollar on Thursday, closing at 270.51 against the US dollar, an appreciation of Rs2.82 or 1.04%.

On the economic front, the IMF and Pakistani authorities have been unable to reach staff-level agreement after a week-long discussion.

The IMF said virtual discussions will continue to finalise the implementation details of policies, implying that an agreement to revive the programme through a staff-level agreement may still take some time as Pakistan moves to execute the prior actions.

IMF stresses on ‘timely, decisive’ implementation of policies as virtual discussions to continue

Meanwhile, the country’s total liquid foreign exchange reserves further shrunk by $202 million during the last week.

According to the SBP’s weekly report issued on Thursday, total liquid foreign reserves held by the country stood at $8.54 billion as of February 3, 2023, compared to $8.74 billion as of Jan 27, 2023.

As for the dollar, it was on the backfoot on Friday after an overnight slide as investors tread with caution ahead of US inflation data next week, with worries over an economic slowdown and the pace of the Federal Reserve’s rate hikes hitting sentiment.

The dollar index, which measures the US currency against six major peers, was at 103.21, having dropped to as low as 102.63 in the previous session. The index is set to end the week with a small gain, its second straight positive week and a run it has not had since October.

Data on Thursday showed the number of Americans filing new claims for unemployment benefits increased more than expected last week, but remained at levels consistent with a tight labor market.

Oil prices, a key indicator of currency parity, fell in early trade on Friday but were still set for a weekly gain with the market continuing to seesaw between fears of a recession hitting the United States and hopes for strong fuel demand recovery in China, the world’s top oil importer.

Inter-bank market rates for dollar on Friday

BID Rs 269.25

OFFER Rs 271.25

Open-market movement

In the open market, the PKR gained 50 paisas for buying and selling against USD, closing at 270 and 273, respectively.

Against Euro, the PKR gained 2.50 rupees for buying and selling, closing at 285 and 288 respectively.

Against UAE Dirham, the PKR lost 30 paisas for buying and selling, closing at 74.30 and 75, respectively.

Against Saudi Riyal, the PKR lost 50 paisas for buying and selling, closing at 71.30 and 72, respectively.

Open-market rates for dollar on Friday

BID Rs 270

OFFER Rs 273