Karachi, September 16, 2024 – The Pakistani rupee made a modest gain of 3 paisas against the US dollar in Monday’s interbank foreign exchange market, closing at PKR 278.13, up from last Friday’s closing rate of PKR 278.16.
Currency analysts attributed the rupee’s slight appreciation to growing optimism surrounding Pakistan’s upcoming loan approval from the International Monetary Fund (IMF). The IMF announced that its executive board is scheduled to review Pakistan’s loan program on September 25, 2024. This potential loan approval has fueled positive sentiment in the market, with expectations that it will unlock a $7 billion bailout package for the struggling economy.
“The anticipation of the IMF loan approval has been a key driver behind the rupee’s recent strength,” commented a senior currency trader in Karachi. “Investors are hopeful that the funds will help stabilize the country’s economy and alleviate pressure on its foreign exchange reserves.”
In addition to the optimism surrounding the IMF, an improvement in Pakistan’s foreign exchange reserves also contributed to the rupee’s gains. Data from the State Bank of Pakistan (SBP) revealed that the country’s foreign exchange reserves increased by $56 million during the week ending on September 6, 2024, bringing the total to $14.796 billion. This is a notable improvement from the previous week’s reserves of $14.74 billion, reported on August 30, 2024.
Breaking down the figures, the SBP’s own reserves rose by $30 million, reaching $9.467 billion as of September 6, up from $9.437 billion a week earlier. Foreign exchange reserves held by commercial banks also showed a positive trend, increasing by $26 million from $5.303 billion to $5.329 billion during the same period.
Market experts suggest that if the IMF executive board grants the anticipated loan approval, the rupee may continue its upward trend. However, they caution that the currency remains vulnerable to external factors such as geopolitical developments and fluctuations in global commodity prices, especially oil. These factors can significantly impact Pakistan’s import bill and foreign exchange reserves.
While the rupee’s recent performance offers some optimism for Pakistan’s economic stability, experts stress the importance of continued fiscal discipline and prudent management of foreign exchange reserves to ensure long-term sustainability. The approval of the IMF loan could provide a much-needed boost, but challenges remain for the country’s economic recovery.
