Pakistan’s rupee made a significant gain against the US dollar in the inter-bank market on Wednesday with the currency dropping below the 230 level during intra-day trading. The massive appreciation comes as Pakistan met all prior conditions of the International Monetary Fund (IMF) and also reported a decline in imports that revived market sentiment.
At around 1pm, the rupee was being quoted at 229.50, an appreciation of Rs8.88 or 3.87% against the greenback, during intra-day trading.
On Tuesday, Pakistan’s rupee had posted a minor recovery for the third successive session to settle at 238.38.
A day ago, the IMF stated that Pakistan has met all prior conditions for the combined 7th and 8th review under the Extended Fund Facility (EFF) programme.
“With the increase in petroleum development levy (PDL), Pakistan has completed the last prior action for the combined seventh and eighth review,” said the IMF, adding that the board meeting is tentatively planned for late August once adequate financing assurances are confirmed.
After the Board’s approval, Pakistan will receive around $1.177 billion.
“By the end of August, it is expected that Pakistan will get a $1.2 billion tranche under the EFF programme as all prior actions are met,” said Trust Securities and Brokerage Limited in a note on Wednesday.
“Hence, it is expected that the market is likely to consolidate.
“The relative consolidation is also expected in forex markets after a continued drop in imports and anticipated correction in demand going forward, subject to the revival of the IMF programme and relative political clarity,” it added.
Tahir Abbas, Head of Research at Arif Habib Limited (AHL), told Business Recorder that the pressure of import payments has subsided, leading to a drop in demand for the dollar.
“This a supply-demand phenomenon as the demand for dollars has reduced amid a drop in import payments, whereas exporters too, are releasing their proceeds, leading to improvement in inflows,” said Abbas.
He said the appreciation momentum could continue in the coming days as well, as government measures to curb the import of bill have resulted in positivity. “Rupee may appreciate to 205-210 in this month,” he added.