US dollar strengthens against rupee

• Rupee closes at Rs176.68 against the US dollar.
• Currency dealers believe rupee will remain stable during the week.
• Market awaits IMF's nod for the disbursement of the $1bn tranche.

KARACHI: The Pakistani rupee depreciated slightly against the US dollar on Monday, recording a meagre loss of 0.01%.

According to the data released by the State Bank of Pakistan (SBP), the local currency closed at Rs176.68 against the US dollar in the interbank market compared to its close of Rs176.67 on Friday.

Currency dealers believe the rupee would remain stable against the dollar in the ongoing week, drawing support from inflows from exporters with market participants anticipating lower import payments, which may help stabilise the local unit.

A dealer said: “We see some support for the rupee from the improvement in the foreign exchange liquidity in the market as the exporters start selling dollars. We also expect the importer demand to remain in check in days to come.”

It is pertinent to mention here that last week, the central bank took an important step to improve the supply of inflows in the market. It asked exporters to bring in proceeds within 120 days instead of 180 days.

Meanwhile, inflows received from overseas Pakistanis through Roshan Digital Account (RDA) crossed the $3 billion mark, reaching $3.16 billion as of December 31, 2021.

The investors, however, were concerned about an unprecedented rise in imports and depletion in the forex reserves.

The rupee has maintained the downtrend for the past eight months. It has lost 16.03% (or Rs24.41) to date, compared to the 22-month high of Rs152.27 recorded in May 2021.

With a fresh decline of 0.01%, the rupee has depreciated by 12.15% (or Rs19.14) since the start of the current fiscal year on July 1, 2021, data released by the central bank revealed.

It is pertinent to mention here that the local unit hit an all-time low of Rs178.24 on December 29.

Another dealer said that the market awaits International Monetary Fund’s (IMF) nod for the disbursement of the $1 billion tranche under the Extended Fund Facility (EFF).

“The market is waiting to see when the IMF executive board meets to consider Pakistan’s request for the completion of the sixth review that will pave the way for the release of the next instalment,” he added.

It is worth mentioning that following a request from the Pakistani authorities, the Executive Board of the IMF has deferred consideration of the completion of the sixth review and release of a $1 billion tranche under the EFF, just days ahead of the date for which it was scheduled (January 12), The News reported