The rupee increased by Rs3.80 to Rs208 against the dollar at 2:50 p.m., from Tuesday’s close of Rs211.80, according to the Forex Association of Pakistan (FAP).
The price of the dollar on Wednesday at closing time was Rs210.50.
The rupee’s value has been steadily falling for weeks before to this development, which has mostly been attributed to the nation’s rising import costs and diminishing foreign exchange reserves.
Yesterday, the dollar reached a record high, gained sharply Rs2, and had been on the rise against the local currency for the eighth consecutive session. The dollar has increased by more over Rs30 since April 11, when the PML-N coalition government took office.
The Exchange Companies Association of Pakistan’s general secretary, Zafar Paracha, attributed the rupee’s recovery to the good news surrounding the IMF accord. By the end of the week, hopefully, the agreement will be finalised, opening the door for loans from China and other financial institutions.
The market had anticipated the local currency to recover from the 212-mark on the basis of the IMF arrangement, which is exactly what transpired, according to Tresmark research director Komal Mansoor.
There is no other significant obstacle, she said, adding that the petroleum levy and tax reform have been put in place. She is certain that this will cause the market’s opinion to shift from “very negative to neutral” and finally to positive.
The rupee has received some assistance from the IMF announcement, but Mettis Global Director Saad Bin Naseer told Dawn.com that it was expected to stay under pressure over the next sessions until a final confirmation was made.
The IMF loan facility had been in limbo since early April due to ongoing impasse in negotiations. The lender had previously voiced concerns over fuel and energy subsidies instituted by the previous PTI government and has since done the same regarding targets set by the new administration for the upcoming fiscal year.
In July 2019, Pakistan and the IMF agreed to a 39-month, $6 billion Extended Fund Facility, however the Fund ceased disbursing roughly $3 billion when the previous administration broke its promises and announced gasoline and energy subsidies.
However, in a major development last night, Pakistan and the programme reached an agreement on the federal budget for 2022–2023, which allowed for the revival of the extended fund facility (EFF) after authorities pledged to raise an additional Rs436 billion in taxes and gradually raise the petroleum levy up to Rs50 per litre.
“Discussions between the IMF staff and the authorities on strategies to strengthen macroeconomic stability in the coming year continue,” IMF Resident Representative in Pakistan Esther Perez Ruiz had earlier told Dawn.
Over the following few days, the IMF mission and the State Bank will finalise the monetary targets, and in the interim, they will share the draught of a Memorandum of Economic and Financial Policy (MEFP).