Karachi, October 29, 2023 – The Pakistani Rupee (PKR) is expected to make a recovery against the US dollar in the upcoming week commencing from October 30, 2023.
This anticipated resurgence is contingent on the approval of the next tranche by the International Monetary Fund (IMF).
During the past week, the rupee experienced a decline of 1.78 rupees, equivalent to 0.6 percent, closing at 280.57 against the US dollar. This marks the second consecutive week of depreciation for the national currency. On the last trading day of the week, the rupee encountered a loss of 48.1 paisa, reaching an intraday high of 280.5 and a low of 280.15 against the greenback.
In the open market, where individuals and businesses engage in foreign currency transactions, the rupee depreciated by 50 paisa, closing at Rs 279.5 for buying and Rs 292.8 for selling. This compares to Rs 279 for buying and Rs 282 for selling just a week ago.
Analysts attribute this depreciation to the country’s ongoing anticipation of the approval of the next tranche of its $3 billion loan from the IMF. The rupee’s performance is inherently tied to the IMF program, which was initiated in July of this year to offer financial support to Pakistan, helping to alleviate its balance of payments crisis and implement essential structural reforms. The IMF is scheduled to assess Pakistan’s progress on its economic targets on November 2, subsequently releasing the next tranche, amounting to approximately $700 million.
The rupee’s decline was also influenced by heightened import payments and decreased export receipts. Geopolitical tensions in the Middle East further exacerbated the situation, resulting in a dampened sentiment among foreign investors and exporters. As a result, many exporters are hesitant to engage in forward contracts due to the current Middle East conflict.
Despite the optimism regarding the rupee’s recovery post-IMF approval, concerns have arisen concerning its long-term stability. Goldman Sachs’ prediction that the rupee’s strong performance may be short-lived has raised these apprehensions.
The success of the rupee’s recovery largely hinges on the approval of the IMF tranche, and its fate will remain tethered to the 280 level until that time. With global economic uncertainty and ongoing geopolitical turmoil, the rupee’s journey in the coming weeks and months remains uncertain.
Economists and financial experts will be closely monitoring the events unfolding in the coming weeks, particularly the IMF’s decision, which is expected to have a significant impact on Pakistan’s economic stability. The resilience of the rupee and its ability to withstand global financial pressures will be put to the test as the nation continues its efforts to restore economic stability and stimulate growth.
State Bank of Pakistan to Unveil Monetary Policy Decision on October 30, 2023
