Rupee Anticipates Increased Pressure Against Dollar Next Week Starting November 13

Rupee Anticipates Increased Pressure Against Dollar Next Week Starting November 13

KARACHI, November 12, 2023: The Pakistani Rupee (PKR) is anticipated to remain under pressure against the US dollar in the coming week as talks with the International Monetary Fund (IMF) persist.

The local currency has experienced a persistent decline for 14 consecutive sessions, depreciating by approximately PKR 2 or 0.60 percent against the dollar this week, closing at 287.03 on Friday compared to 285.29 at the beginning of the week. Notably, the foreign exchange market observed a shutdown on Thursday in observance of a public holiday.

The ongoing review of Pakistan’s bailout package by the IMF mission, which commenced on November 2, is expected to conclude by December 15. This assessment holds significant weight as it will determine whether Pakistan is eligible to receive the second tranche of $700 million in December. The initial installment of $1.2 billion was disbursed in July as part of the standby arrangement.

Market analysts attribute the pressure on the rupee to a decline in export proceeds, prompting the central bank to actively purchase dollars in an effort to bolster reserves and fulfill the IMF’s stipulations. The IMF’s keen scrutiny of Pakistan’s economic performance adds an additional layer of complexity to the situation, as the nation strives to meet the outlined conditions for continued financial support.

The central bank’s move to accumulate dollars is perceived as an attempt to build a safety net against economic uncertainties and fulfill the IMF’s prerequisites for the release of funds. This proactive stance is aimed at shoring up reserves, maintaining stability, and navigating the economic challenges posed by the global economic landscape.

Amidst these developments, the latest remittance figures provide a ray of hope for the Pakistani economy. The influx of remittances, coupled with an optimistic market sentiment and expectations of an improvement in the balance of payments, instills confidence that the rupee may stabilize in the near future. Remittance figures have shown resilience, acting as a critical source of foreign exchange inflow and contributing positively to the country’s external position.

While challenges persist, the general sentiment among market observers is cautiously optimistic. The ongoing talks with the IMF and the potential disbursement of the second tranche in December are pivotal events that could influence the trajectory of the rupee. A successful review could alleviate some of the existing pressures, providing a much-needed boost to the local currency.

As the financial landscape remains fluid, stakeholders are closely monitoring developments, both domestic and international, that may impact the exchange rate. The coming week will likely see continued volatility in the foreign exchange market as the nation awaits the outcome of the IMF review and assesses the implications for the Pakistani Rupee in the global economic landscape.