Karachi, July 4: The Pakistani rupee showed an appreciable gain of Rs 15 against the US dollar in the interbank market with stocks continuing an upward trend on Tuesday following the last-minute approval of funding by the IMF to the cash-strapped country.
The Forex Association of Pakistan said the dollar was trading at around 271 rupees in the interbank after the market opened in the morning with the dollar trading at Rs 286. Will IMF Deal End Pakistan's Economic Misery?
A spokesperson said that the local currency had appreciated by Rs 15. Intikhab Ahmed from the Capital Investments firm said the rupee gains and stock appreciation was due to the International Monetary Fund (IMF) deal but the market's positive notes needed to be closely followed this week. Debt-Trapped Pakistan Set To Become Fourth Biggest IMF Debtor in World, Says Report.
“Finance Minister Ishaq Dar had given a clear hint that the rupee would gain as soon as the banks opened this morning and that has happened,” he said. The banks and market had closed from Wednesday to Sunday for Eid Holidays when the government announced the IMF deal.
Banks were also closed on Monday for clearing. “We might see the dollar now stabilising around the Rs 275 range and around Rs 280 and Rs 285 in the open market,” Ahmed said. His opinion was backed by Zafar Bostan, the President of the Forex Association.
Alpha Beta Core CEO Khurram Shehzad said the approval of the stand-by agreement with the IMF was the main reason for the decline in the dollar in the domestic market.
“You will see people who have been hoarding dollars now trying to unload them in the market after the 15 rupees decline today and this might see an increase in the country's foreign exchange reserves,” Khurrum said.
“And if this happens, then you will see an increase in remittances with banking channels because the hundi-hawala won't take a risk,” he said. A leading foreign currency dealer Sarmad Kohistani said there was still a need for the government to further bring the dollar rate down. “It should be around the range of Rs 250 markets after stabilising.”
“Hopefully with the IMF deal once we see a revival of more foreign investments things will improve,” he added. On Monday, the Karachi Stock Exchange before closing had shored up by around 2,400 points, the highest single-day gain, with the benchmark KSE-100 index up 2,414 points at 43,867, closing at 43,899 points, up 2,446.32 points from Friday's close of 41,452.68.
However, on Tuesday, two leading global rating agencies warned that Pakistan requires significantly more funds than what it is receiving from the global lender to meet its debt maturities and to finance its economic recovery.
Moody's Investors Service and Fitch Ratings that issued the warning are two of the big three credit rating agencies, recognised by the US Securities and Exchange Commission. They noted that Pakistan has to repay USD 25 billion in the current fiscal year to meet its debt obligations.