Dollar jumps by Rs1.12 due to uncertainty over IMF deal

KARACHI: Pakistani rupee continued its losing streak against the US dollar in the inter-bank market for the second day in a row on Tuesday and shed Rs1.12 (-0.65 percent).
According to the State Bank of Pakistan, the US dollar opened at Rs170.51 and closed at Rs171.63. Within the open market, the rupee was traded at 171.80/172.80 per dollar.
According to currency experts, the uncertainty over the revival of the IMF programme and lack of clarity on this front are fuelling the fall. Besides, skyrocketing inflation means that the country will enhance import of essential goods to stabilise the prices in the local market; therefore, the dollar is in high demand. Moreover, anticipation of increase in imported inflation has sparked panic buying of the greenback.
They said that the State Bank of Pakistan has not made any announcement regarding the receipt of $3 billion from Saudi Arabia which is dampening the market sentiment. They said the central bank might have received the amount and it should update the citizens about the development as it will strengthen the market sentiment.”
Arif Habib Commodities Managing Director and CEO Ahsan Mehanti stated that compliance on few conditions laid down by IMF was still pending and delay in approval of next tranche was driving rupee depreciation. He stated that matters pertaining to autonomy of the central bank, increase in petroleum development levy and power tariff rationalisation were awaiting conclusion.
He was of the view that approval and release of the next tranche worth $1 billion would arrest the rupee’s slide and steer recovery of local currency against the greenback.
The Pakistani rupee made all-time low of 175.27 against the greenback on October 26 last and since then the local currency has recovered Rs3.64 during the last ten sessions on the back of the Saudi package as well as prospects of resumption of $6 billion Extended Fund Facility by the International Monetary Fund (IMF). Overall, the rupee depreciated by Rs1.62 during the last two days, while the rupee’s depreciation during the fiscal year 2021-22 has been Rs14.21 and Rs11.46 in the current year 2021.
Saudi Arabia on October 26, 2021 announced additional support of $3 billion to Pakistan for building its foreign exchange reserves. The financial support is in addition to a $1.2 billion deferred oil facility to Pakistan to help its balance of payment issues. – TLTP