Pakistan's rupee kicked off the first session of the week on a positive note, registering a gain of 0.38% against the US dollar in the inter-bank market on Monday.
As per the State Bank of Pakistan (SBP), the rupee closed at 186.05 after a day-on-day appreciation of 70 paisas, or 0.38%.
Positivity returned after Pakistan and the International Monetary Fund (IMF) agreed to move ahead on the stalled $6-billion Extended Fund Facility (EFF) with Islamabad also requesting an extended time period and enhancement of the loan size.
Govt, IMF reach new agreement?
The gain comes after the rupee witnessed a disastrous previous week, losing value in five out of six sessions to depreciate 2.8% against the US dollar as euphoria over the return to political stability ended, making way for deteriorating economic indicators.
Rupee falls marginally, ends week at 186.75 against US dollar
“The gain in Pak rupee value comes amid a revival of Pakistan negotiations with the IMF,” Abdullah Umer, analyst at Ismail Iqbal Securities, told Business Recorder. He said that the latest current account figures of around $1 billion for the month of March also acted as a positive indicator, as these “figures remain at a sustainable level.”
Revival of talks with the IMF has been contingent on Pakistan rolling back subsidies on fuel prices. Miftah Ismail, Pakistan's finance minister, has agreed that the subsidies will be cut. However, the government has not yet officially announced raising fuel prices.
“We agreed that prompt action is needed to reverse the unfunded subsidies which have slowed discussions for the 7th review... Based on the constructive discussions with the authorities in Washington, the IMF expects to field a mission to Pakistan in May to resume discussions over policies for completing the 7th EFF review,” said the IMF in a statement on Sunday night.
Meanwhile, Umer said that the decline in oil prices has also brought some respite.
Oil prices, a key determinant of currency parity, slumped to about two-week lows on Monday, extending losses from last week, as concerns grew that prolonged COVID-19 lockdowns in Shanghai and potential US rate hikes would hurt global economic growth and demand for fuel.
“The oil prices still remain too high for Pakistan, and would need a further drop in oil prices to a range of $70-80 per barrel to be sustainable for Pakistan,” added Umer.
Inter-bank market rates for dollar on Monday
BID Rs 186
OFFER Rs 186.20
Open-market movement
In the open market, the PKR gained 50 paisas for both buying and selling against USD, closing at 185.75 and 187, respectively.
Against Euro, the PKR gained one rupee for both buying and selling, closing at 198 and 199.50, respectively.
Against UAE Dirham, the PKR gained 10 paisas for both buying and selling, closing at 50 and 50.50, respectively.
Against Saudi Riyal, the PKR gained 10 paisas for buying and 20 paisas for selling, closing at 49 and 49.40, respectively.
Open-market rates for dollar on Monday
BID Rs 185.75
OFFER Rs 187