Karachi, December 7, 2023 – The Pakistani Rupee (PKR) concluded Thursday on a positive note, exhibiting resilience against the US dollar by closing at PKR 284.12 in the interbank foreign exchange market.
This modest gain of PKR 0.02 from the previous day’s closing of PKR 284.14 is reflective of the prevailing optimism surrounding the potential approval of the next $700 million tranche by the International Monetary Fund (IMF) under its $3 billion Extended Fund Facility (EFF) arrangement.
Market observers attribute the upward trajectory of the rupee to the anticipation of the IMF’s approval, a crucial factor shaping the positive sentiment in Pakistan’s currency market. Analysts believe that the injection of funds from the IMF will contribute to the stability of the economic landscape, strengthening the resilience of the rupee against the US dollar.
The recent appreciation of the rupee is seen as a result of several positive economic indicators and significant events. Notably, Pakistan’s foreign exchange reserves have shown improvement, with the State Bank of Pakistan’s (SBP) reserves increasing by $77 million, reaching $7.257 billion by the week ending November 24. The overall reserves, including those held by commercial banks, also witnessed a rise of $91 million, reaching $12.393 billion.
The extension of Saudi Arabia’s $3 billion deposit with the SBP for an additional year, maturing on December 5, has played a pivotal role in fostering positive market sentiment. This extension is considered essential in maintaining Pakistan’s foreign exchange reserves and addressing challenges in the external account.
Looking ahead, market expectations are high for the approval of the second tranche of $700 million by the IMF board on Thursday. While the amount may seem moderate, it has the potential to impact the US Dollar to Pakistani Rupee (USDPKR) exchange rate, possibly pushing it into the 280-282 range.
At this level, the Central Bank is anticipated to engage in strategic dollar purchases to reinforce its reserves and ensure stability in the foreign exchange market. The outcome of this decision is expected to shape the trajectory of the rupee’s performance in the coming weeks, with investors and analysts closely monitoring developments for further insights into the currency’s future direction.
As the economic landscape evolves, the positive momentum in the currency market underscores the potential for sustained growth and stability, providing a ray of hope for investors and businesses in Pakistan. The positive indicators, including improved foreign exchange reserves and ongoing financial support from international partners, signal a promising outlook for the country’s economic landscape in the near term.
