The rupee extended gains against the US dollar in intra-day trading on Wednesday, on account of positive developments on the external front.
The rupee was quoted at 204.39 in the intra-bank market against the greenback, a gain of Rs2.48. The local currency has appreciated Rs7.54 since dropping to the all-time low of Rs211.93 on June 22.
On Tuesday, the rupee ended its two-day depreciation run against the US dollar, to close at Rs206.87, a gain of Rs1.07 or 0.52%, as Pakistan and the International Monetary Fund (IMF) inch closer to reviving the bailout programme.
Rupee appreciates as Pakistan closer to reviving IMF bailout programme
Pakistan has received the IMF Memorandum of Economic and Financial Policies (MEFP), following meetings last week between the two sides, Finance Minister Miftah Ismail said on Tuesday.
Later in the day, Prime Minister Shehbaz Sharif said that the IMF will club the seventh and eighth reviews of Pakistan’s Extended Fund Facility (EFF), and disburse roughly $1.9 billion in coming days.
Experts say that the latest development on the revival of the IMF programme, which is widely seen as crucial for Pakistan’s economy, has improved investor sentiment.
“Expectations of positive news from Saudi Arabia, in the form of an extension in oil credit facility in the wake of chief of army staff General Qamar Javed Bajwa’s recent visit to the kingdom has also enhanced sentiments,” Fahad Rauf, Head of Research at Ismail Iqbal Securities, told Business Recorder.
“I believe that the rupee will remain above 200, as anything below this level is not sustainable on account of high inflation,” he added.
The gains in Pak rupee come despite a high current account deficit (CAD) posted in the month of May, which clocked in at $1.425 billion, compared to $618 million recorded in April, an increase of 131% on a monthly basis, showed data released by the State Bank of Pakistan.
Rauf was of the view that the latest deficit was expected on account of a slowdown in remittance inflows, which declined by over 25% on a monthly basis.