PKR gains Rs1.5 in interbank after IMF tranche received - Business

The PKR continued to recover on Thursday, appreciating by Rs1.5 against the dollar during early trade in the interbank market, with analysts attributing the gains to the State Bank of Pakistan (SBP) receiving a much-needed $1.16 billion deposit from the International Monetary Fund (IMF). The local currency was being traded at Rs217.25 per dollar after appreciating 0.68 per cent by 9:49am, according to data shared by the Forex Association of Pakistan (FAP). FAP Chairman Malik Bostan said the market sentiment would become more favourable after the IMF’s deposit and the rupee would gain sharply against the dollar. He said the difference in rates between the interbank and open markets had not only ended but the dollar was being sold at lower rates in the latter. “Those who were holding on to dollars are constantly selling them in the open market now following the rupee’s gains, due to which the rates in it are lower,” he elaborated. The market expected dollar inflows to increase as a result of the aid being given for flood relief, and money from friendly countries to be received soon, due to which the rupee would further improve, he added. “The rupee can improve to less than Rs200 per dollar.” Mettis Global Director Saad bin Naseer agreed with Bostan’s view, saying the rupee’s gains today could be attributed to the IMF’s $1.2bn deposit with the SBP. “With IMF programme in place, rupee will [likely] gain against the dollar as outlook for dollar inflows has improved. Furthermore, remittances are expected to swell in coming months in view of the floods across the country. “On the demand front, the economic activity is slowing down as seen by plant shutdowns announced by auto assemblers and steel producers. This will likely keep imports and demand in check as production across sectors continues to decline,” Naseer added.

IMF deposit

The SBP received the IMF’s deposit on Wednesday, two days after the much-needed nod of the Fund to immediate disbursement on successful completion of the combined seventh and eighth reviews of a loan facility. In a late-night tweet, the SBP confirmed the development and expressed the confidence that it would help improve foreign exchange reserves. The rupee has been recovering for the last three sessions after the IMF approved the release of the crucial bailout. The rupee had fallen to a record low of 239.94 on July 28. It had then recovered for 11 consecutive sessions, closing at Rs213.90 in the interbank on Aug 16. It had started falling again from Aug 17, losing Rs8.02 till Aug 29 but reversed the trend on Tuesday. According to financial data and analytics portal Mettis Global, overall, the PKR gained around Rs20 against the dollar in August.

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