For the seventh consecutive session, the rupee gains ground against the dollar.
During intraday activity in the interbank market on Wednesday, the Pakistani rupee strengthened versus the US dollar for the sixth consecutive session.
The market was closed for two days due to Ashura — Monday and Tuesday — but when it reopened today (Wednesday), the rupee had gained 2.51 versus the dollar and was trading at 221.49 as of 11:15 a.m.
Aside from all of the encouraging signals, the newest development that has contributed to the rupee’s gain is the revelation that the United Arab Emirates (UAE) intends to invest $1 billion in Pakistani businesses.
As the country navigates a difficult economic position, the UAE said last week that it aims to invest $1 billion in Pakistani firms in a number of economic and investment areas.
Dr. Khaqan Hassan Najeeb, an economist and former consultant to the federal ministry of finance, stated that the causes that pushed the rupee down are dissipating, and the currency is rising as a result.
The International Monetary Fund’s (IMF) Executive Board will convene on August 24 to evaluate Pakistan’s proposal to approve the Extended Fund Facility.
However, as a condition for the program’s reactivation, the IMF has requested Pakistan to fill a $4 billion funding deficit, which the government is attempting to secure from friendly countries.
Pakistan’s powerful quarters have addressed US officials, as well as officials from the Kingdom of Saudi Arabia and the United Arab Emirates, in order to get the required financial support for the resumption of the stalled IMF programme.
In a recent interview, Finance Minister Miftah Ismail stated that the IMF loan would provide macroeconomic stability. Economist Najeeb concurred, noting that the continuation of the IMF programme is an insight that is assisting in market stabilisation.
In an interview with The News, State Bank of Pakistan (SBP) Acting Governor Dr Murtaza Syed stated that Pakistan will soon bridge its $4 billion external financing gap.
Syed stated that Pakistan has already met its gross external financing requirements of $34 to $35 billion, but that Islamabad is working to secure confirmation of $4 billion inflows from friendly countries such as Saudi Arabia, the United Arab Emirates, and Qatar.
However, the acting SBP governor was hesitant to provide a timetable for closing the $4 billion financing gap. He stated that it would be resolved soon.
Pakistan is eager for loans as the country’s SBP-held foreign exchange reserves continue to dwindle. The central bank’s forex currency reserves were $8,385.4 million on July 29, a $190 million decrease from $8,575.16 on July 22.
“The dollar liquidity shortage appears to be improving as imports fell in July, exporters liquidated their positions, and oil prices, as well as wheat and cotton prices, are falling in the international market,” said economist Najeeb.
“In a market-driven exchange rate regime, we must remember that the value of the currency is heavily influenced by the country’s current account deficit, which it must control in the future,” he added.
