KARACHI
Pakistani rupee edged up against the US dollar in the interbank market last week and improved by 0.05 percent.
According to details, the rupee opened at 279.19 against the greenback in the interbank market on Monday last and closed at 279.04 on Friday. This marks the second consecutive weekly win witnessed by the domestic unit against the mighty dollar.
Overall, the rupee has improved by Rs9.25 during the current fiscal year 2023-24.
The local unit improved by Rs0.39 in February, Rs2.36 in January and Rs3.31 in December, while it shed Rs3.69 against the US dollar in November after gaining Rs6.26 (+2.23 percent) against the greenback in the month of October.
Similarly, the local unit gained traction against the greenback in the open market and closed the week in the range of 278 for buying and 280 for selling against 279.3 for buying and 282 for selling in the preceding week, according to data provided by different exchange companies. The rupee surged against the greenback by Re1 in February, Rs2 in January and Rs3.50 in December. The uncertainty surrounding the general elections held in the country on February 08 has somewhat disrupted the stable phase the home unit maintained against the USD for a significant period.
The rupee made gains against the greenback after the International Monetary Fund (IMF) said that it will support the formulation of a new medium-term economic programme for Pakistan. The IMF Resident Representative in Pakistan Esther Perez Ruiz said on Friday last that its aim is to support the implementation of strong policies to deepen financial stability, address the longstanding economic and underlying balance of payments challenges, and restore sustained and inclusive growth for the benefit of all Pakistani citizens.
This includes stronger public finances, through high-quality revenue measures to broaden the tax base while scaling up the support for the most vulnerable, restoring energy sector viability, improving institutional governance and anti-corruption effectiveness, SOE reform, building climate resilience, and creating a level playing field for private businesses to promote investment and job creation.
Ruiz further said that the IMF looks forward to engaging with the new government to complete the second review under the current stand-by arrangement and, should the government request, support the formulation of a new medium-term economic programme.
In a related development, inflow of overseas workers’ remittances clocked in at $2.25 billion in February 2024, 6.2 percent lower on a month-on-month basis when compared to $2.4 billion in January 2024, showed data released by the SBP on Friday. On a yearly basis, the monthly inflow of remittances registered an increase of 13 percent as it stood at $1.99 billion in the same month of the previous year, data showed.
According to Goldman Sachs’ GSDEER framework, the PKR is nearly 20 percent undervalued on a 12-month horizon and offers about 26% nominal carry. The Goldman Sachs Economic Research report suggests that positive real rates could be the catalyst needed for the Rupee’s value increase, provided inflation rates begin to decline. The report notes that inflationary pressures from oil, gas, and electricity price hikes continue to pose risks, potentially prompting the State Bank to maintain a cautious stance.
