Karachi, September 5, 2024 – The Pakistani rupee rebounded today, gaining 9 paisas against the US dollar after a three-day decline. The rupee closed at PKR 278.68 per dollar, up from PKR 278.77 the previous day in the interbank foreign exchange market.
Currency analysts attribute the rupee’s recovery to the potential loan arrangement with an international bank, which is seen as a step toward securing an International Monetary Fund (IMF) loan. The rupee had been on a downward trend for the first three days of the week, but the recent developments have injected some optimism into the market.
Positive signals for the rupee’s outlook come from recent economic indicators. The State Bank of Pakistan (SBP) reported a modest rise in foreign exchange reserves, which increased by $112 million to $9.403 billion as of August 23, 2024. This rise has been well-received by market participants, who view it as a sign of financial stability. The increased reserves provide a crucial buffer against external economic pressures and help maintain the rupee’s value.
Further bolstering confidence, Moody’s Investors Service recently upgraded Pakistan’s credit rating to Caa2. This upgrade, attributed to improved macroeconomic conditions and better government liquidity, reflects the positive impact of the 37-month Extended Fund Facility (EFF) agreement with the IMF, reached at a staff level on July 12, 2024. The agreement is expected to enhance investor confidence and contribute to economic stability in the coming months.
Pakistan is also anticipating final approval from the IMF’s executive board for a new $7 billion loan program. Although approval has been delayed due to pending debt rollovers and the need to address the country’s external financing gap, the IMF loan, along with approximately $4 billion in loans from Middle Eastern banks, is expected to strengthen Pakistan’s financial position. Negotiations are also ongoing for the continuation of Saudi Arabia’s oil financing facility.
Looking forward, market analysts expect the rupee to remain within its current range in the coming weeks, supported by steady foreign currency inflows and a favorable outlook from international credit rating agencies. The government’s ongoing efforts to secure additional financing are also anticipated to bolster the rupee’s stability in the near term.
