Pakistani rupee makes a comeback against US dollar in interbankBreaking

March 03, 2023

After getting a historic drubbing Thursday at the hands of US dollar, the Pakistani rupee made a comeback on Friday and revived by Rs7.09 in the interbank market. According to the latest money market data, the Pakistani rupee managed to sail well at the start of the business during interbank trading as the greenback shed its value heavily and was being traded at Rs278, down by Rs7.09 notches.

Yesterday, the US dollar decimated Pakistani rupee to historic low in the interbank market as the greenback skyrocketed by a huge margin of Rs18.98 against the rupee and ended the day at a record level of Rs285.09 in the interbank market - a day after crushing the local currency amid standoff with the International Monetary Fund (IMF) and downgrading by the Moody’s in its latest ratings.

The market was upbeat on Friday after the statement of Finance Minister Ishaq Dar who claimed that government’s negotiations with the International Monetary Fund were about to conclude and it was expecting to sign Staff Level Agreement with the IMF by next week. Pakistan has completely surrendered to the IMF to revive its loan programme by completing almost all prior actions needed for the SLA to avert default situation.

The government has allowed the exchange rate to move freely with a massive Rs25 per dollar depreciation in two days, a rare 300-basis-point surge in policy rate, and the government’s announcement of continuing with an almost 10pc increase in power rates on a permanent basis through a special surcharge.

With the IMF deal in sight, the market responded positively and traders showed confidence in the value of rupee. Meanwhile, the foreign exchange reserves held by the State Bank of Pakistan (SBP) increased by $556 million to $3.81 billion during the week ended on February 24, 2023, marking the third consecutive increase on weekly basis, according to the data released by the central bank on Thursday.

The surge in SBP's reserves is attributed to the commercial loan disbursement from China wherein SBP received $700 million from China Development Bank. “During the week ended on Feb 24, 2023, SBP received $700 million as GoP commercial loan disbursement from China. After accounting for external debt repayments, SBP reserves increased by US$ 556 million to US$ 3,814.1 million,” the statement issued by the central bank read.

 Credit : Independent News Pakistan-INP

On the other hand, the reserves held by commercial banks saw a decrease of $14.2mn or 0.25% WoW to clock in at $5.45bn.