Saturday July 20, 2024

Rupee extends losses

By Our Correspondent
January 21, 2023

KARACHI: The rupee on Friday maintained a downtrend against the dollar on a pressure of ongoing economic woes amid low foreign exchange reserves, delays in the IMF loan programme, and lack of foreign inflows.

The local unit fell 0.23 percent to 229.67 versus the dollar in the interbank market.

In the open market, the domestic currency ended at 240 per dollar, compared with the previous close of 239.50. It declined by 50 paisas against the dollar.

The government's commitment to adopt the International Monetary Fund (IMF) recommendations soon to resume the loan programme, according to analysts, may help stabilise foreign exchange reserves and ease the pressure on the rupee. Difficult but necessary reforms will go a long way toward preventing the forex crisis and a potential default.

Since the IMF recommendations are set to be implemented next week, it is expected that the State Bank of Pakistan to raise the policy rate when the monetary policy statement is issued on Monday.

"What Pakistan needs right now is a short-term pragmatic solution to defuse the external ticking bomb,” Arif Habib Limited, a local brokerage house," said in a note.

As bitter as it may sound - more macro orthodoxy is a welcomed first step, as authorities have finally decided to take unpopulous measures including the imposition of general sales tax, flood levy, and other taxes coupled with tariff hikes and revisiting foreign exchange regime to ensure IMF is through, according to the brokerage firm.

The note explained that Pakistan needed an immediate disbursement from the IMF that could be followed by financing from other multilateral and bilateral international creditors.