Karachi, September 27, 2024 – The interbank foreign exchange market began trading on Friday with a notable 19-paisa gain in the value of the Pakistani rupee against the US dollar, driven by optimism following the approval of a loan from the International Monetary Fund (IMF). The rupee appreciated to PKR 277.50 from the previous day’s close of PKR 277.69 per US dollar.
The rise in the rupee’s value is largely attributed to the approval of the much-anticipated $7 billion Extended Fund Facility (EFF) by the IMF’s executive board. The program is viewed as a critical financial lifeline for Pakistan, which has been contending with severe balance of payments issues and external debt obligations. Analysts believe the IMF’s endorsement signals confidence in Pakistan’s ongoing economic reforms, boosting market sentiment and stabilizing the rupee.
“The rupee has been facing intense pressure, mainly due to high dollar demand for imports, especially at the end of the quarter,” noted a currency analyst. “However, the IMF loan approval has sparked optimism, leading to a temporary reprieve for the rupee despite these underlying pressures.”
The IMF program is expected to provide Pakistan with the necessary funds to shore up its dwindling foreign exchange reserves, which have been under strain in recent months. The loan will also improve the country’s ability to meet immediate external financing requirements and support the government’s efforts to stabilize the economy amid rising inflation and a depreciating currency.
In addition to the IMF funds, incoming inflows from export receipts and remittances are anticipated to further strengthen the local currency in the weeks ahead. These foreign exchange sources are crucial for Pakistan’s economic health, and their anticipated increase could offer more support to the rupee in the medium term.
“Export receipts and remittances, which are key foreign exchange inflows for Pakistan, should bolster the rupee as these funds start coming in,” remarked another market analyst. “Moreover, the IMF’s approval of the EFF signals international confidence in Pakistan’s economic direction, potentially alleviating some of the pressure on the rupee.”
However, experts warned that while the IMF loan offers short-term relief, the rupee’s long-term stability hinges on continued economic reforms and prudent fiscal management. External factors, such as the strength of the US dollar, fluctuations in global commodity prices, and geopolitical events, will also play a crucial role in determining the rupee’s future performance.
