The rupee experienced an Rs.1.6 increase in value against the dollar during interbank trade on Thursday morning, with analysts largely attributing the recovery to Pakistan reaching a staff-level agreement with the International Monetary Fund (IMF) for the revival of the loan program.
The greenback was trading at Rs208.5 in the interbank market at 11:40am, according to the Forex Association of Pakistan (FAP). This is an improvement of Rs1.6 from the previous day’s close of Rs210.1.
FAP Chairman Malik Bostan attributed the development to the expansion of Pakistan’s loan programme by the Fund. “We are hoping to see a further decline in the greenback, somewhere below Rs200,” he told.
Bostan also said that the decrease in the price of crude oil would help lower the country’s import bill, ultimately leading to a reduction in inflation. “All this will relieve the pressure on the economy,” he pointed out, adding that the country had managed to “come out of danger”.
Meanwhile, analyst Komal Mansoor said that the market expected the greenback to fall to Rs205 or below.
“The change will be gradual. Right now, only a staff-level agreement has been reached. I feel the market will move when an executive-level agreement is reached,” she said.
Director of Mettis Global, Saad Bin Naseer, attributed today’s gains to the IMF agreement, saying the “correction was relatively small” due to the dollar’s “strengthening trend”.
Naseer went on to say that the US dollar hit a two-decade high this week against a basket of currencies, due to expectations of aggressive rate hikes from the Federal Reserve in light of higher inflation readings.