The rupee continued to recover against the US dollar, closing at a two-week high of 197.87 in the inter-bank market on Wednesday.

As per the State Bank of Pakistan (SBP), the currency settled at 197.87 after a day-on-day appreciation of 59 paisas or 0.30%. On Tuesday, the rupee had closed at 198.46 after a day-on-day appreciation of 60 paisas or 0.30%.

This is the strongest level for the local currency after May 18, when it closed at 198.39 per dollar. The rupee has been recovering against the greenback ever since the government partially removed fuel subsidy and hiked prices of petroleum products by Rs30 per litre.

The move signalled its willingness to resume the stalled International Monetary Fund (IMF) programme, and gave a sense of economic direction to the currency market.

Rupee records third successive gain to close at 198.46 against dollar

Alpha Beta Core CEO Khurram Schehzad said the rupee has been witnessing robust recovery over the past few sessions, which meant Pakistan was receiving dollar payments either in the form of exports proceeds, remittances or Roshan Digital Accounts.

Market analysts also said positive speculation surrounding the IMF deal and hopes of its revival were driving optimism in the market.

In addition, they said the government’s efforts to curb the import bill by banning inward shipments of non-essential items also contributed to the uptrend in local currency.

“The government's decision to partially reduce the subsidies given on petroleum products has taken away some pressure in the currency market, indicating a resumption of the stalled IMF programme,” Wajid Rizvi, Head of Strategy and Economy at JS Global, had told Business Recorder earlier.

However, he said the rupee "has already lost a lot of ground due to delays in decision making, and it will be difficult for it to appreciate to the 185 level,” he said.

Last week, talks between Pakistan and the IMF for the 7th review under the $6 billion Extended Fund Facility (EFF) programme remained inconclusive, as the Fund pointed out "deviations" on fiscal sides from the policies agreed in the last review. Resultantly, no staff level agreement was reached while the revival of $6 billion EFF was delayed.

Stalled IMF programme: Govt fails to successfully persuade IMF

The fund emphasised the urgency of concrete policy actions, including in the context of removing fuel and energy subsidies and the fiscal year 2023 budget, to achieve programme objectives. The IMF statement indicates that the government would be taking prior actions in the federal budget for fiscal year 2022-23.

Inter-bank market rates for dollar on Wednesday

BID Rs 197.80

OFFER Rs 197.90

Open-market movement

In the open market, the PKR gained one rupee for buying and 90 paisas for selling against USD, closing at 195.50 and 197.40, respectively.

Against Euro, the PKR gained 2.50 rupees for both buying and selling, closing at 208 and 210, respectively.

Against UAE Dirham, the PKR lost 10 paisas for both buying and selling, closing at 53.30 and 53.80, respectively.

Against Saudi Riyal, the PKR remained unchanged for both buying and selling, closing at 51.80 and 52.30, respectively.

Open-market rates for dollar on Wednesday

BID Rs 195.50

OFFER Rs 197.40