Rupee slips again despite progress on IMF talks

The local currency shed another 0.21 per cent of its value against the US dollar and closed at fresh all-time low of 211.93 (57.69 against the dirham) in the interbank market

Muzaffar Rizvi

Published: Wed 22 Jun 2022, 6:56 PM

Last updated: Wed 22 Jun 2022, 10:47 PM

The Pak rupee remained volatile for ninth consecutive working day despite a positive news about progress in talks with the International Monetary Funds (IMF) on reviving $6 billion extended fund facility.

The Pakistani currency shed another 0.21 per cent of its value against the US dollar and closed at fresh all-time low of 211.93 (57.69 against the dirham) in the interbank market on Wednesday. It responded positively on the IMF news and recovered some grounds in early trade but later reversed the trend due to high demand of greenback in the market.

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In the open market, the rupee was changing hands more than 215 to a dollar as the importers were buying the greenback to clear their bills before the end of ongoing financial year 2021-22 on June 30.

Short-lived recovery

Samiullah Tariq, head of research at Pakistan-Kuwait Investment Company, said the rupee will remain under pressure until a formal deal is reached with the IMF.

“The currency will breath a sigh of relief only after the positive news flow. It may only recover around Rs2-3 against the greenback till the end of the fiscal year,” Tariq said.

Analysts and market experts said widening trade deficit, shrinking foreign exchange reserves, declining foreign direct investment and political instability will continue to weigh on the rupee’s near-term outlook despite reaching a deal with the IMF to revive $6 billion loan programme.

“The IMF deal will bring economic stability and ultimately benefit the rupee in the longer period,” Tariq said.

Meanwhile, Minister for Finance and Revenue Miftah Ismail said the Chinese consortium of banks on Tuesday signed a $2.3 billion loan facility agreement.

In a tweet, the minister said the inflow was expected within a couple of days. “We thank the Chinese government for facilitating this transaction,” he added.

Later, talking to journalists he said a good news from the IMF was also expected by the end of current week as Pakistan government was close to an agreement with the fund.

SBP refutes rumours

Meanwhile, the State Bank of Pakistan (SBP) rebutted rumours about its $8.99 billion foreign exchange reserves and said these reserves are ‘fully usable’.

In a series of tweets, the central bank said the country’s foreign exchange reserves have not dried up and it has not stopped import payments.

“‪#SBP has noticed certain rumors implying that SBP Reserves have dried up or are not usable, that SBP has stopped import payments, and that banks have run out of US$,” SBP tweeted.

The SBP’s response came after reports implied that the reserves have dried up or are not usable, that the SBP has stopped import payments and that banks have run out of dollars.

The SBP noted that on June 10, it released details of the liquid foreign reserves, which stood at $8.99 billion. It added that those did not include gold reserves and are “fully usable for all purposes”.

“It is further clarified that ‪#SBP has not stopped import payments and commercial banks have sufficient $ liquidity to execute these payments. Indeed, import payments of around US$ 4.7 billion have been executed through the interbank market during the month so far,” SBP tweeted.

muzaffarrizvi@khaleejtimes.com