The stabilising Pakistani currency ticked down Rs0.04 and closed slightly below Friday’s four-and-a-half-month high at Rs279.08 against the US dollar in the inter-bank market on Monday.
The currency recorded the nominal drop after Pakistan’s central bank reported that its foreign exchange reserves further decreased $54 million to $7.89 billion in the week ended March 1, 2024. It indicated that the supply of foreign currency continued to remain thin in the banking system.
According to SBP data, the domestic currency hit four-and-a-half-month high close at Rs279.04 against the greenback of Friday. The currency has cumulatively surged 10.05%, or Rs28.06, over the past six months until March 8.
Read: Rupee rises to 4-1/2-month high vs dollar
In the open market, however, the rupee maintained its uptrend for the fourth consecutive working day with gains of Rs0.07 at Rs281.61/$, according to the Exchange Companies Association of Pakistan. Accordingly, the disparity between the two markets narrowed to Rs2.53 (or 0.90%), down from over Rs3, or 1%, early last week, well below the maximum limit of 1.25% (around Rs4) recommended by the IMF.
The maintenance of the difference within the prescribed ceiling has helped Pakistan meet a key condition of the global lender. It will pave the way for a successful review under the maturing $3 billion IMF standby arrangement, resulting in receipt of the last tranche of $1.1 billion in March or April 2024. The release of loan installment will improve Pakistan’s foreign currency reserves to nearly $9 billion.
In addition, the satisfactory gap between currency values will also enable the country to conveniently win the next IMF loan programme, potentially worth $6-8 billion, once the current standby arrangement concludes in April 2024.
Published in The Express Tribune, March 12th, 2024.
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