Rupee hits five-month apex on IMF review optimism

By Our Correspondent

March 14, 2024

Pakistani currency notes of Rs1000 and Rs5 coins can be seen in this picture. — AFP/File

KARACHI: The rupee surged to a five-month peak on Wednesday, buoyed by the finance ministry's announcement of the International Monetary Fund's (IMF) impending review of the country's $3 billion loan programme and prospects of a new, more extensive bailout.

In the interbank market, the rupee closed at 278.79 against the dollar, marking its strongest position since October 17, 2023, and appreciating by 29 paisas or 0.11 percent during the day. The open market also reflected this uptrend, with the rupee finishing at 281.22 per dollar, up from 281.47 in the previous session.

Traders attributed the rupee's rise to increased forward sales by exporters, anticipating further gains amid a positive economic forecast for the country. Additionally, premiums on the currency have been on a downward trajectory.

The finance ministry confirmed that the second review of the IMF's stand-by arrangement (SBA) is scheduled for March 14-18 in Islamabad and the country has met all structural benchmarks, qualitative performance criteria and indicative targets for successful completion of the review.

The ministry also expressedg confidence in the final review of the SBA and the anticipated staff level agreement. Following this agreement, Pakistan expects the disbursement of the final $1.1 billion tranche, pending the IMF executive board's approval.

Brokerage Chase Securities highlighted Pakistan's adherence to the IMF's benchmarks, suggesting a positive outcome for the upcoming review.

“This review not only signifies the conclusion of the existing arrangement but also paves the way for discussions regarding a potential extension and refinement of future IMF programmes, a priority for the incoming Finance Minister,” it added.

Muhammad Aurangzeb, minister for Finance and Revenues, a day earlier, announced intentions to negotiate a "large and long programme" with the IMF under the extended fund facility (EFF), with plans to discuss the EFF's framework and potential expansion during the forthcoming talks.