Rupee falls on IMF worries

KARACHI: The rupee dropped against the dollar on Monday on an uncertainty over the fate of a bailout from the International Monetary Fund (IMF), while an increase in global oil prices also weighed on the local unit.

The domestic currency fell 0.44 percent or 1.25 rupees to 285.04 versus the dollar in the interbank market. The rupee lost 50 paisas to close at 287.50 per dollar in the open market.

“Uncertainty on IMF and friendly countries inflow affecting PKR,” said Mohammad Sohail, CEO of Topline Securities. Inflows from friendly countries are important to get the IMF programme and there are no commitments yet. It is no more an economic policy matter now and is more of a foreign policy subject, according to a note by Chase Securities.

“Some of the ruling coalition partners are due to visit Saudi Arabia next week and it is a key event to watch,” it added. Finance Minister Ishaq Dar will be leading a high-powered delegation to the US which will attend the upcoming annual spring meeting of the Bretton Woods Institutions, known as the International Monetary Fund and World Bank, from April 10 to 16.

Pakistan and the IMF would also discuss the possibility of combining the remaining 10th and 11th reviews under the $6.5 billion Extended Fund Facility programme in case the pending 9th review is completed, according to reports.

Brent oil futures jumped almost $6 to $85.54 a barrel on Monday after Saudi Arabia and other OPEC+ producers announced unexpected production cuts. “The crude oil prices have surged, following a voluntary production cut announcement by OPEC. This is negative for Pakistan's external account and hence the rupee,” said Fahad Rauf, head of research at Ismail Iqbal Securities.