KARACHI
The Pakistani rupee depreciated against the US dollar by 19 paisas (-0.07 percent) in the interbank market on Thursday.
The State Bank of Pakistan (SBP) said in a tweet that the dollar opened at Rs287.18 in the interbank market and closed at Rs287.37. During the current fiscal year 2022-23, Pakistani rupee has lost Rs81.48 against the US dollar in the interbank, while it plummeted by Rs60.94 against the greenback in the current year.
Similarly, the rupee snapped a two-day winning streak against the US dollar in the open market and depreciated by Re1. The greenback was quoted in the range of Rs292-295 in the open-market as compared to a range of Rs291-294 a session earlier.
According to currency experts, stabilization in exchange rate hinges on the revival of the International Monetary Fund (IMF) loan programme. IMF’s Resident Representative for Pakistan Esther Perez Ruiz said on Thursday that Pakistan’s budget for the financial year 2023-24 has missed an opportunity to broaden the tax base in a more progressive way. Esther said that the IMF team stands ready to work with the government in refining this budget ahead of its passage.
Pakistan is at an increasing risk of failing to restart its $6.7 billion bailout programme with the IMF, putting the country closer to a sovereign default, Moody’s Investors Service said. The rupee, which is trading near a record low against the dollar, may face further downward pressure, said Grace Lim, a sovereign analyst with the ratings company in Singapore. The IMF’s comments on the exchange rate likely referred to the gap in the interbank and retail markets, she said.
The local currency has lost more than 20 percent this year after officials devalued the currency in January, making it one of the worst performers globally.
Pakistan’s financing options beyond June are highly uncertain, even as its external repayments will remain significant over the next few years, Lim said. Continuing the engagement with the IMF would support additional financing from other multilateral and bilateral partners, which could reduce default risk, she said.
It is important to note that the country has only two weeks left until its bailout programme expires and the dissatisfaction of the Fund over the draft budget is the major drawback for the already weakening economy.
