The rupee strengthened against the US dollar in interbank trade on Thursday morning, appreciating more than Re1. This is being attributed to the government’s measures to pave the way for the release of loan tranches by the International Monetary Fund (IMF).
According to the Forex Association of Pakistan (FAP), the rupee appreciated Rs1.40 from the previous day’s close of Rs205.40 to reach Rs204 around 12pm.
The FAP’s closing rate of the previous session was higher than the State Bank of Pakistan’s rate of Rs205.12.
FAP Chairperson Malik Bostan told Dawn.com that the rupee had been Showing signs of recovery against the dollar in recent days amid hopes that the IMF would soon release funds of around $2 billion.
A report by Mettis Global — web-based financial data and analytics portal — also linked the rupee’s appreciation witnessed today to the government’s steps aimed at the release of loan tranches by the IMF.
However, the report added that experts are of the view that this appreciation in the rupee’s value was “short-lived due to a prolonged bullish rally of oil prices in the international market”.
On Wednesday, the National Assembly approved the finance bill for the upcoming fiscal year, with some major changes relating to taxation and levy on petroleum products in line with the government’s commitment to the IMF. This action follows Pakistan receiving the Memorandum of Economic and Fiscal Policies (MEFP) from the IMF for the combined seventh and eighth reviews of its $6 billion loan programme, which has been stalled since April.
The MEFP outlines certain actions that must be completed before the IMF board can consider Pakistan’s request for funding. According to the MEFP, Pakistan will need to take two more “prior actions” in order to secure the two combined tranches by the end of July or early August. These prior actions include the passage of the federal budget as agreed upon with the IMF, and presenting a memorandum of understanding signed by the provincial governments agreeing to provide a combined cash surplus of Rs750bn to the central government.