Pakistan's rupee ended the week with a significant improvement against the US dollar, appreciating 0.18% in the inter-bank market as the government passed two key bills that are seen as key conditions to reviving the International Monetary Fund (IMF) programme.
As per the State Bank of Pakistan (SBP), the rupee closed at 176.07 after a day-on-day appreciation of 31 paisas or 0.18%. The appreciation comes after the rupee lost 0.09% against the dollar on Thursday.
Last month, the rupee had closed at its all-time record low of 178.24 against the US dollar before appreciating the following two days to end the year at 176.51.
Rupee unable to sustain gains, depreciates against US dollar
The reversal in rupee trajectory comes after the government succeeded in passing the Finance (Supplementary) Bill, 2021 and the State Bank of Pakistan (Amendment) Bill, 2021, from the National Assembly on Thursday, amid strong protest by the opposition.
The Finance (Supplementary) Bill, 2021 also known as ‘mini-budget’ was passed by the house with some amendments presented by the finance minister, himself, while all the amendments put forth by the opposition were rejected.
The bills are key conditions set by the IMF for the clearance of the sixth review of the $6-billion Extended Fund Facility (EFF).
“The passing of bills by the parliament have resolved all issues pertaining to the IMF approval. Therefore, the market has incorporated the said development accordingly,” Tahir Abbas, Head of Research at Arif Habib Limited, told Business Recorder.
Meanwhile, AKD Securities, in a note, said that the IMF nod is likely to unlock dollar flows from multilateral/bilateral sources as well as allowing the government for the successful issuance of international bonds of $3-3.5 billion, potentially reducing pressure on rupee-dollar parity.
Talking about workers' remittance figures, Abbas said inflow of dollars from informal channels has also increased.
The remittances figure is key for Pakistan's current account balance, where a deficit has put extensive pressure on the currency for the past few months. Pakistan reported remittances of $2.5 billion in December, up 2.5% month-on-month.
Inter-bank market rates for dollar on Friday
BID Rs 176
OFFER Rs 176.10
Open-market movement
In the open market, the PKR gained 50 paisas for both buying and selling against USD, closing at 177 and 178, respectively.
Against Euro, the PKR lost 50 paisas for both buying and selling, closing at 201.50 and 203.50, respectively.
Against UAE Dirham, the PKR gained 10 paisas for both buying and selling, closing at 48.42 and 48.90, respectively.
Against Saudi Riyal, the PKR gained 10 paisas for both buying and selling, closing at 46.50 and 46.95, respectively.
Open-market rates for dollar on Friday
BID Rs 177
OFFER Rs 178