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Rupee gains more ground against dollar amid hopes of IMF deal

Pakistani authorities expect IMF to share draft memorandum of economic and financial policies today

By Web Desk
February 09, 2023
A representational image of a currency market dealer counting rupee notes. — AFP/File
A representational image of a currency market dealer counting rupee notes. — AFP/File

The Pakistani rupee on Thursday gained more ground against the US dollar amid reports of headway in talks with the International Monetary Fund (IMF) for the financial assistance programme. 

The local currency appreciated by Rs2.82 or 1.04% in the interbank market to close at Rs270.5 against the greenback, according to the State Bank of Pakistan (SBP).

Rupee's recovery started as it clawed back as the market was hopeful of a positive outcome of the ongoing talks between the government and the global lender.

In total, the dollar has shed Rs8.7 in the interbank market so far this week.

'Good day'

Exchange Companies Association of Pakistan (ECAP) General Secretary Zafar Paracha termed it a "good day for Pakistan’s economy".

"The main reason behind [rupee's appreciation] is the staff-level agreement between Pakistan and IMF drawing closer, with sources claiming that the talks went successful," said Paracha.

The currency dealer said that another factor that led the rupee to gain in the interbank market was that the exporters who had held payments started encashment and the inflow of remittances from overseas Pakistanis, has also started.

"The economy will be better in the coming days and foreign direct investments will also be received," predicted Paracha.

Capital market expert Saad Ali told The News that the rupee rallied due to the rising optimism in the market about economic stability led by news of investments by Qatar in state-owned assets.

He agreed that news of IMF talks ending on a positive note was also a factor for the local currency to gain ground. 

The Pakistani authorities are expecting the IMF to share the draft memorandum of economic and financial policies (MEFP) with them today.

The handover of the draft memorandum was delayed as the differences persisted over external financing needs and power sector losses between the IMF and Pakistani side. 

The scheduled timeframe for completion of the 9th review is going to end today. Keeping in view the last reviews, done by the Pakistani side with the IMF under the ongoing Extended Fund Facility (EFF), both sides took much time for striking staff-level agreement even after getting the draft MEFP document and nine tables. But, according to the Pakistani authorities, now the IMF mission had changed its working style — they will finalise the agreement first and then share the MEFP with Pakistan today.

“There is a broad consensus on the reform actions and measures. The Mission chief also called on the finance minister and briefed him about the talks,” a statement by Finance Ministry said. It said that the Mission was working on putting it all together and would finalise the MEFP.