Karachi, September 26, 2024 – The Pakistani rupee appreciated against the US dollar on Thursday, reaching PKR 277.69 in the interbank market, as positive market sentiment followed the approval of a loan program by the International Monetary Fund (IMF).
The rupee gained 16 paisas from the previous day’s closing rate of PKR 277.85, signaling optimism in the financial markets.
Currency analysts attributed the rupee’s appreciation to the much-anticipated $7 billion Extended Fund Facility (EFF) approved by the IMF executive board. The approval is seen as a crucial lifeline for Pakistan’s economy, which has been grappling with balance of payment challenges and external debt pressures. The influx of funds from the IMF is expected to stabilize foreign exchange reserves and improve the country’s fiscal outlook.
“The rupee has been under significant pressure due to high demand for dollars to meet import payments, particularly at the end of the quarter,” explained a currency analyst. “However, the IMF loan approval has injected positive sentiment into the market, allowing the rupee to strengthen despite these pressures.”
The approval of the IMF loan is also expected to restore investor confidence, as it will help Pakistan meet its immediate external financing needs and stabilize the economy in the medium term. The facility will provide essential support to Pakistan as it navigates economic challenges such as rising inflation, currency depreciation, and declining foreign exchange reserves.
Market experts also highlighted that while the rupee’s appreciation is modest, it signals the potential for further gains. The IMF funds, along with expected inflows from export receipts and remittances, are projected to boost the local currency’s strength in the coming weeks.
“Export receipts and remittances, which are key sources of foreign exchange for Pakistan, are likely to bolster the rupee’s value further as funds start flowing in,” another analyst noted. “The approval of the IMF program also indicates international confidence in Pakistan’s economic reforms, which should help ease pressure on the rupee going forward.”
However, analysts cautioned that while the IMF loan brings short-term relief, Pakistan must continue to implement structural reforms and manage its fiscal deficits to ensure long-term stability. The rupee’s performance will also depend on global economic conditions, including the strength of the US dollar, international commodity prices, and geopolitical factors.
As Pakistan navigates these economic waters, the rupee is expected to experience modest gains, particularly with the backing of the IMF and improved market sentiment.
