On Thursday the rupee boosted against the dollar as hoped the renewal of the International Monetary Fund (IMF) bailout grew after the confirmation of support from Saudi Arabia for Pakistan in the International lende.
According to the State Bank of Pakistan, the local currency rose 1.2% or Rs3.43 from Wednesday’s closing of 287.85 to settle at 284.42 versus the US dollar on the interbank market (SBP).
This rebound, which occurred the day after the rupee set a new record low of 287.85 in the interbank market after declining by Re.56 or 0.19%, was praised by analysts.. as a good move. If capital inflows are sustained, they believe the local currency will remain resilient for days to come.
Pakistan now has renewed optimism that the deal would be signed soon after the IMF informed it that Saudi Arabia has confirmed the existence of an extra $2 billion in deposits.
The IMF and Pakistan are discussing whether to release $1.1 billion of the $6.5 billion bailout package.. which was agreed in 2019 as of the end of January. The government has eliminated a false exchange rate cap, decreased subsidies, raised taxes, and raised the price of fuel to free up the funds.
Despite this, the contract has been delayed owing to assurances of more cash from friendly nations.
The lender had alerted the Pakistani authorities about the change, sources told The News and the Fund personnel seemed to be generally pleased with the most recent confirmation.
According to the sources, everyone is now waiting for the UAE to confirm an additional $1 billion payment from them, which would open the door to discussions about an SLA with the IMF.
On his trip to the US, where he is scheduled to undertake discussions over the transfer of cash, Finance Minister Ishaq Dar is likely to stop in the UAE.
The US dollar increased slightly on Thursday but hasn’t deviated far from a recent two-month low as traders assessed the potential effect of crucial US employment data that will be news on Federal Reserve policy during the holiday weekend.
The litany of weak economic indicators has raised concerns about an oncoming recession in the biggest economy in the world, which has reduced risk appetite and driven traders to look for safe-haven assets.
It should be emphasized that the SBP’s foreign currency reserves, which are barely enough to fund one month’s imports, are now at a crucial level of $4.2 billion.
