The Pakistani rupee maintained its momentum against the US dollar for the eighth successive session, appreciating further to close near the 219 level in the inter-bank market on Thursday.
As per the State Bank of Pakistan (SBP), the rupee settled at 218.88, an appreciation of Rs3.03 or 1.38% against the greenback. The rupee even hit the 217 level before losing some of its intra-day gain by the end of the session.
7th successive gain: Rupee closes at 221.91 against US dollar
The currency has strengthened consistently since hitting its all-time low of 239.94 against the US dollar in the inter-bank market last month. In the last eight sessions, the rupee has appreciated by over Rs21 or 9.6%.
“Media reports suggest the letter of intent from the International Monetary Fund (IMF) is expected anytime for locking the bailout package, which will continue lifting market sentiment and support the rupee,” said Trust Securities and Brokerage Limited (TSBL) in a note on Thursday.
Last month, Pakistani authorities and the IMF reached a staff level agreement for the combined seventh and eighth review. The IMF board meeting is tentatively planned for late August once adequate financing assurances are confirmed.
The disbursement of funds from the IMF is crucial for the cash-strapped economy and also vital for unlocking further funding from other international creditors and friendly countries.
“(Furthermore) the mini-budget is also on the cards for satisfying IMF on different sectors, while Presidential Ordinance is also expected for a new fixed tax scheme of Rs30 billion for small traders from October 1, while old tax rates before the FY23 budget will continue till Sept 2022,” TSBL said.
Meanwhile, oil prices, a key determinant of currency parity, also slipped on Thursday, as concerns over supply disruptions eased and markets looked for evidence of improving fuel demand.
"The rupee may improve further after the realisation of IMF funds,” Saad Hashmey, Executive Director at BMA Capital, told Business Recorder.
“The market has gained confidence on account of positive expectations of inflows from IMF and other creditors. Furthermore, reduction in the import bill has also positively impacted the PKR rate."
Zafar Paracha, General Secretary at Exchange Companies Association of Pakistan (ECAP) in a video message, stated sentiments have changed in the market. “Exporters are realising their proceeds, whereas importers are holding off on retiring their LCs (Letter of Credit),” he said.
The currency dealer said Pakistan's financial credentials are strong, thus the local currency should improve further. He called for further facilitation of overseas Pakistanis to attract higher remittance flows.
Inter-bank market rates for dollar on Thursday
BID Rs 217
OFFER Rs 219
Open-market movement
In the open market, the PKR gained 2 rupees for both buying and selling against USD, closing at 214 and 216, respectively.
Against Euro, the PKR gained one rupee for both buying and selling, closing at 220 and 222 respectively.
Against UAE Dirham, the PKR gained 1.20 rupees for buying and 1.30 rupees for selling, closing at 57.50 and 58, respectively.
Against Saudi Riyal, the PKR gained 50 paisas for both buying and selling, closing at 57 and 57.50, respectively.
Open-market rates for dollar on Thursday
BID Rs 214
OFFER Rs 216