PKR rises to six-month high vs USD after IMF deal

KARACHI
Pakistani rupee closed stronger against the US dollar in the interbank market for the fourth week in a row, appreciating by 0.22 percent to an around six-month high, fuelled by agreement with the International Monetary Fund on the ongoing bailout programme.
According to details, the rupee opened at 278.74 against the greenback in the interbank market on Monday last and closed at 278.14 on Friday. Overall, the rupee has improved by Rs10.15 during the current fiscal year 2023-24.
The local unit improved by Rs0.39 in February, Rs2.36 in January and Rs3.31 in December, while it shed Rs3.69 against the US dollar in November after gaining Rs6.26 (+2.23 percent) against the greenback in the month of October.
The local currency has cumulatively strengthened by 9.43 percent or Rs28.96 over the past six months compared to its all-time low of Rs307.10/$ in the first week of September 2023.
Similarly, the local unit gained traction against the greenback in the open market and closed the week in the range of 278.24 for buying and 280.86 for selling against 278.61 for buying and 281.26 for selling in the preceding week, according to data provided by different exchange companies.
The rupee surged against the greenback by Re1 in February, Rs2 in January and Rs3.50 in December.
An IMF statement issued on Wednesday last said that IMF staff and the Pakistani authorities have reached a staff-level agreement on the second and final review under Pakistan’s Stand-By Arrangement, subject to the approval of the IMF’s Executive Board. Upon approval, Pakistan will have access to SDR 828 million (around US$1.1 billion). The agreement recognises the strong programme implementation by the State Bank of Pakistan and the caretaker government in recent months, as well as the new government’s intentions for ongoing policy and reform efforts to move Pakistan from stabilization to a strong and sustainable recovery, said the statement.
Pakistan seeks a fresh, larger, and longer bailout from the IMF, and according to reports, the government will negotiate an extended fund facility with the IMF in Washington next month. Islamabad plans to ask for a loan of at least $8 billion.
Finance Minister Muhammad Aurangzeb has said he is looking to tap Chinese investors by selling as much as $300 million in Panda Bonds for the first time this year, reported Bloomberg on Friday. Selling yuan-denominated debt will allow Pakistan to diversify its funding sources and reach investors in a new market, Aurangzeb said, added the report. It’s something “we should have looked at quite frankly some time back,” he was quoted as saying.
Meanwhile, the country’s total liquid foreign reserves rose by $239 million during the last week, the SBP reported on Thursday. The total liquid foreign reserves held by the country stood at $13.391 billion as of March 15, 2024 compared to $13.151 billion.
During the week under review, SBP’s reserves increased by $105 million to reach $8.018 billion, up from $7.913 billion. Net foreign reserves held by commercial banks stood at $5.373 billion, surged by $134 million in a week. The current level of foreign reserves is sufficient to cover the import bill of 1.54 months.