Karachi, June 26, 2023: The Pakistani Rupee (PKR) showed a slight improvement against the US dollar on Monday, following an optimistic sentiment surrounding the resumption of the International Monetary Fund (IMF) program.
The exchange rate saw a modest increase of three paisas, with the rupee closing at PKR 286.71 to the dollar, compared to PKR 286.74 at the end of the previous week.
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Currency experts have noted that the market remained positive due to the government’s efforts to regain the IMF program. In a significant move, the State Bank of Pakistan (SBP) lifted the ban on import payments last Friday, despite the scarcity of the greenback. This decision was seen as a step towards meeting the conditions set by the IMF.
Additionally, the announcement of an additional tax burden on citizens for the upcoming fiscal year, starting on July 1, 2023, was considered another move aimed at securing the IMF program. These measures indicate the government’s commitment to economic reforms and fiscal discipline.
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The recent statement by the SBP about the receipt of $300 million in proceeds from commercial loans during the past week has also contributed to the strengthening of the rupee. This development has boosted confidence in the market, signaling positive investor sentiment.
However, Pakistan’s foreign exchange reserves have experienced a significant decline of $514 million over the previous week. As of June 16, 2023, the reserves stand at $8.864 billion, down from $9.378 billion on June 9, 2023. This decline raises concerns about the country’s repayment capabilities and underscores the challenges Pakistan faces on the external front.
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Despite a substantial reduction in the current account deficit during the first eleven months of the current fiscal year, Pakistan continues to grapple with foreign exchange reserve pressures. The government will need to implement further measures to stabilize and strengthen the economy, attract foreign investment, and boost exports to mitigate these challenges effectively.
READ MORE: Pakistani Rupee Gains Slightly Against Dollar as Current Account Deficit Narrows
Economic analysts and experts suggest that sustained efforts to improve the balance of payments, enhance export competitiveness, and attract foreign direct investment will be crucial for Pakistan’s economic stability and long-term growth. The government’s commitment to the IMF program, combined with prudent monetary and fiscal policies, will play a pivotal role in addressing the country’s external challenges and ensuring a sustainable economic future.
