ISLAMABAD: Pakistan rupee maintained its upward trajectory for the ninth consecutive session against the US dollar on Friday, and settled at near the 215 level in the inter-bank market as sentiments improved amid development on the International Monetary Fund (IMF) front.
As per the State Bank of Pakistan (SBP), the rupee settled at 215.49, an appreciation of Rs3.39 or 1.57% against the greenback.
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 nine sessions, the rupee has appreciated by over Rs24 or 11.3%.
“The appreciation trend commenced after exporters started surrendering their proceeds, however, the recent gain is due to a drop in the dollar index after inflation in the US remained unchanged in July,” Abdullah Umer, analyst at Ismail Iqbal Securities Limited, said.
The dollar index was down 0.114% at 105.1, well off of its two-decade peak of 109.29 hit on July 14. The decline comes as US inflation was not as high as anticipated in July, prompting traders to dial back future rate hike expectations by the Federal Reserve.
Fed funds futures traders are now pricing in a 58% chance of a 50-basis-point hike in September and a 42% chance of a 75-basis-point increase.
“Furthermore, speculation has been curbed in the domestic market, thus PKR is discovering its value despite the drop in forex reserves,” said Umer.
Forex reserves held by the State Bank of Pakistan (SBP) fell another $555 million, clocking in at an alarming level of $7.83 billion as of August 5, 2022, as policymakers in the country continued to scramble over securing dollar inflows and provide breathing room to the economy.
On Friday, it was reported that Pakistan has received a Letter of Intent (LoI) from the IMF, moving closer to disbursement of the next tranche for the combined seventh and eighth review.
The IMF Executive Board approval is now the final step for revival of the stalled Extended Fund Facility (EFF).