interbank market
KARACHI
Pakistani rupee recovered 47 paisas (+o.27 percent) against the US dollar in the interbank market on Monday.
According to the State Bank of Pakistan, the US dollar opened at Rs175.24 and closed at Rs174.77. Within the open market, the rupee was traded at 175.50/176.50 per dollar. Overall, the rupee’s depreciation during the fiscal year 2021-22 has been Rs17.35 and Rs14.60 in the current year 2021.
According to currency experts, the rupee recovered as the government and International Monetary Fund (IMF) have reached a staff-level agreement on measures needed to complete the sixth review under the Extended Fund Facility (EFF). Pakistan will get about $1.059 billion on the completion of the review, bringing total disbursements under the EFF to about $3.027 billion and helping unlock significant funding from bilateral and multilateral partners.
They said that completion of the sixth review may help stabilise the exchange rate for a long period, adding it would arrest the rupee’s slide and steer recovery of local currency against the greenback.
They said the market opened with a sharp rise in the rupee value, following the monetary policy tightening by the central bank. The State Bank of Pakistan (SBP) on Friday last announced a significant increase in the key policy rate by 150 basis points to 8.75 percent. The central bank surprised the market with a sharp increase in the key policy rate. However, it said the policy tightening would help arrest inflation and ease the money market to reduce pressure on the local unit.
The experts said the latest efforts of the SBP might not help stabilise the exchange rate until foreign inflows are not materialised. They said the Saudi government has pledged $3 billion as cash transfer to Pakistan for assisting in the balance of payment; however, such amount has not been transferred to the SBP yet, sending negative signals to the market.
