Rupee continues to recover on IMF funding hopes

• Rupee gains 0.30% against US dollar in interbank market.
• Local current closes at Rs198.46 against greenback.
• Since July 1, 2021, rupee has collectively dropped by Rs40.92.

KARACHI: The Pakistani rupee’s uptrend persisted on Tuesday as the currency gained 0.30% against the US dollar in the interbank market, closing at Rs198.46.

There has been a concern about what would happen if the International Monetary Fund (IMF) does not revive the stalled multi-billion dollars programme, however, following the massive hike in the price of petroleum products — a prerequisite set by the lender — the currency market reacted positively to the fast-changing developments.

Moreover, the local currency recovered in view of the interest rate hike and the State Bank of Pakistan’s (SBP) measures to cut imports and reduce inflationary pressures.

Analysts believe that with the recent measures taken by the government to reverse petroleum subsidy partially, the IMF seems to be a done deal. Further, this would prove beneficial for Pakistan as the long-impending approval from the IMF for the seventh review (worth $900 million) would unlock more inflows from other multilateral donors as well.

Read more: Which other items has the govt exempted from import ban?

Since the beginning of this fiscal year (July 1, 2021) to date, the rupee has collectively dropped by a massive 25.97% (or Rs40.92) compared to the previous fiscal year’s close at Rs157.54.

The rupee has maintained a downward trend for the last 13 months. It has lost 30.33% (or Rs46.19) to date, compared to the record high of Rs152.27 recorded in May 2021.