business
Wednesday Jun 29 2022
By
BDBusiness Desk

Rupee records handsome gain against US dollar

By
BDBusiness Desk
A foreign currency dealer counts US dollars at a shop in Karachi, Pakistan, May 19, 2022. — AFP/File
A foreign currency dealer counts US dollars at a shop in Karachi, Pakistan, May 19, 2022. — AFP/File

  • Local unit closes at 205.12 against US dollar in interbank market.
  • Analysts expect rupee to close FY22 in range of 202-205.
  • Say rupee recovering after Pakistan received MEFP from IMF.


KARACHI: The Pakistani rupee staged a handsome recovery against the US dollar on hopes that Pakistan and the International Monetary Fund (IMF) will soon reach a staff-level agreement despite more conditions put forward by the Fund.

A day earlier, Pakistan received the Memorandum of Economic and Fiscal Policies (MEFP) from the IMF for the combined seventh and eighth reviews after which the market expects country to receive $2 billion instead of the scheduled $1 billion loan tranche. 

The local unit was trading at Rs204 during intra-day trade, however, closed the day at Rs205.12 against the dollar with a fresh gain of Rs1.75, or 0.85%, according to the State Bank of Pakistan (SBP).

Since the beginning of this fiscal year (July 1, 2021) to date, the rupee has collectively dropped by a massive 30.20% (or Rs47.58) compared to the previous fiscal year’s close at Rs157.54.

Analysts expect the rupee to close the fiscal year 2022-23 in the range of 202-205 tomorrow.

Speaking to Geo.tv, Pakistan-Kuwait Investment Company Head of Research Samiullah Tariq said that the local currency recovered because of positive news from the IMF.

“Although the MEFP document received from the IMF has some tough conditions and hints towards further tightening the market is hopeful that the government will accept those conditions after slight negotiations,” he added.

Arif Habib Commodities Managing Director and CEO Ahsan Mehanti, identified three reasons behind the recovery of the rupee against the greenback.

  • Hopes that IMF release $2 billion instead of $1 billion
  • Receipt of $2.3 billion from China
  • Expectations of improved inflows in remittances on account of Eid ul Adha.

The analyst further added that speculations are in favour of the Pakistani rupee, therefore the market expects the currency to close FY22 near the 202 level.

The rupee has maintained a downward trend for the last 13 months. It has lost 34.7% (or Rs52.85) to date, compared to the record high of Rs152.27 recorded in May 2021.