” Rupee ticks lower to Rs278.68/$ in inter-bank market ” | Express News Pro
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KARACHI:
Pakistani currency depreciated Rs0.05 and closed at Rs278.68 against the US dollar in the inter-bank market on Tuesday, maintaining its downward trend for the second consecutive day amid no updates from the International Monetary Fund (IMF) as to when its executive board would consider a new $7 billion loan programme for Pakistan.
Finance Minister Muhammad Aurangzeb and a couple of global research houses have voiced expectations that the multilateral lender will potentially give its final approval by the end of this month.
Any delay in loan inflows will mount pressure on the rupee in the coming weeks. Pakistan has already achieved a staff-level agreement with the IMF a couple of weeks ago, which is a major milestone in securing the bailout package.
Secondly, no major achievement on the privatisation front may also hinder the IMF programme as the sale of Pakistan International Airlines (PIA) to private sector investors has been linked with the IMF nod.
The government has delayed the privatisation of the National Bank of Pakistan (NBP) due to a legal obstacle. According to a news report, the move is not in line with the commitment given to the IMF that the special status of seven state-owned firms, including the NBP, will be withdrawn.
The lull in the privatisation drive will potentially impact the rupee-dollar parity since authorities have counted privatisation proceeds among the overall inflows in the current fiscal year. The IMF also considers the sale of national assets as a must for the success of loan programme.
Apart from that, the prevailing political uncertainty in the country may spread gloom, exacerbate economic woes and reverse early signs of economic recovery. The political instability has a significant potential to pile pressure on the rupee, which has come a long way since hitting the all-time low at Rs307.10/$ in September 2023.
The currency has continued to move in a narrow band of Rs278-278.74/$ for the past four and a half months, indicating that it has stabilised around current levels.
Exchange Companies Association of Pakistan (ECAP) reported that the local currency remained stable at Rs280.40/$ for the second consecutive day in the open market.
Financial experts have projected the currency will stay at current levels over the next three to five months, subject to the beginning of the IMF programme this month.
The rupee has recently got support from the increase of $75 million in the central bank’s foreign exchange reserves to $9.10 billion in the week ended July 26, which signalled that the supply of foreign currency stood higher than its demand.
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