As the country is expected to reach a deal with the International Monetary Fund as early as this week, the local currency continued strengthening its position against the US dollar. The Pakistani rupee appreciated by 43 paisas against the greenback in the interbank trading on Friday. According to the data provided by the money dealers, the Pakistani rupee kept up its upward trajectory as the US dollar shed another 43 paisas in its value and was being exchanged for Rs260.50. On Thursday, the local currency marched ahead with a gain of 97 paisas against the greenback and ended the day at Rs260.93.

The country is expected to receive external financing inflows once it struck a deal with the IMF. According to reports, the global lender is likely to sign the staff-level agreement (SLA) on Feb 28 and this will be followed by an executive board meeting of the IMF in the first week of March. President Arif Alvi also gave approval to the Finance Supplementary Bill, 2023 under of Article 75 of the Constitution of Pakistan which represents a critical milestone in the government efforts to unlock the IMF programme. The State Bank of Pakistan is also expected to raise policy rate by 200 basis points later today in an off-cycle review this week.

“We support the use of monetary policy to rein in inflation, anchor inflation expectations, and support the exchange rate,” said Esther Perez Ruiz, the IMF’s resident representative in Pakistan, in an email to Reuters. Meanwhile, the foreign exchange reserves held by the central bank have increased by $65.6 million or 2.05% WoW to $3.25 billion during the week ended on February 17, 2023, marking the second consecutive increase on weekly basis, according to the data released by the State Bank on Thursday. Similarly, the country total reserves rose by $24.3 million to $8.72 billion. On the other hand, the reserves held by commercial banks saw a decrease of $41.3 million to clock in at $5.46 billion.

Credit: Independent News Pakistan-INP