The Pakistani rupee remained stable against the US dollar on Tuesday in the interbank market as demand for the greenback and the supply reached equilibrium.
According to the State Bank of Pakistan (SBP), the local unit closed at 223.95 against the US dollar, which had finished the session at the same value on Monday — after depreciating Re0.01.
Currency dealers don’t see the rupee going far from the base as they are currently assessing the impact of the $500 million inflows received from the Asian Infrastructure Investment Bank (AIIB) Tuesday.
The SBP received $500 million from the AIIB, confirmed Finance Minister Ishaq Dar Tuesday.
"Asian Infrastructure Investment Bank (AIIB) has transferred today, as per their Board’s approval, to State Bank of Pakistan/Government of Pakistan US $ 500 million as program financing," tweeted the finance minister.
Moreover, dealers said a delay in the arrival of a tranche of the International Monetary Fund's (IMF) Extended Funding Facility may weigh on the rupee-dollar parity in the days to come.
Pakistan and the IMF talks are continuing, with both sides yet to strike a broader agreement on a revised macroeconomic framework for the current financial year, reported The News, citing sources.
The lingering of the talks may delay the conclusion of the ninth review and release of the $1 billion tranche till the next calendar year 2023.
The SBP raised its benchmark interest rate by 100 basis points to 16% in an effort to tame high inflation. The SBP has confirmed that the $1 billion Eurobond repayment that is due on December 5 will be made on December 2.
“This repayment will not have any impact on foreign reserves as the funding has already been arranged,” it said. In addition, $7 billion worth of loan payments has also been rolled over.
Moreover, the Karachi interbank offered rate (KIBOR), a gauge of what banks charge each other to borrow the rupee, hits a record high on Monday, as the money market was surprised by the State Bank’s decisions to raise interest rates by 100 basis points.