Rupee continues to gain ground vs dollar
The US dollar fell against the rupee for the fourth consecutive session during intraday trade in the interbank market, as Pakistan’s import pressure fell in July. During Wednesday’s intraday session, the dollar fell Rs0.38 to Rs238 versus the rupee, down from 238.38 at Tuesday’s interbank close.
The dollar began losing ground on Friday after the rupee — one of the world’s poorest performing currencies — fell for ten straight sessions in the final days of July — and depreciated by about 5% just last week.According to data from the Pakistan Bureau of Statistics (PBS), imports fell by 38.3 percent over the previous month, as the government banned a number of luxury commodities in order to manage the economy’s dollar shortfall. Not only were imports down, but exports were down as well.
However, the rupee’s pressure lessened as the trade deficit fell by 18.3 percent to $2.64 billion in July 2022, down from $3.235 billion in July 2021. The shortfall was $4.96 billion in June 2022. Tahir Abbas, head of research at Arif Habib Limited, told Geo.tv that the currency is stabilising and likely to gain further as import pressures ease.
According to capital market analyst Muhammad Saad Ali, the external account data is good and will help the economy even more.The rupee also rose after the International Monetary Fund (IMF) announced that Pakistan had completed the final precondition for the combined seventh and eighth reviews, which was to increase the charge on petroleum goods.
Esther Perez Ruiz, the IMF’s Resident Representative in Pakistan, said in a statement Tuesday that a board meeting is provisionally set for late August after enough finance assurances are secured.
In light of the lender’s remark, Abbas stated that additional inflows from friendly countries, as well as the IMF tranche release due by the end of this month, will help stabilise the economy.
The Pakistani rupee has lost more than 30% of its value against the US dollar this year, and the country’s dollar debt has reached new lows as it prepares to make a $1 billion bond payment in December.
“News that Pakistan is on the verge of resuming its IMF programme — such as IMF recognition that Pakistan has met all preceding conditions — […] have fuelled optimism for stronger macroeconomic stability in the future,” Ali said.
The country is attempting to allay fears that it may follow Sri Lanka into default this year by securing billions of dollars not just from the IMF but also from countries such as China and Saudi Arabia.Concerning the current political environment, Ali stated that it appears that both the government and the PTI are not pushing for early elections, which could “delay the steps” required to preserve macroeconomic stability.
