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Saturday May 25, 2024

Rupee gains on stable reserves

By Our Correspondent
April 20, 2024
A foreign currency counts Pakistani rupee notes at a shop in Karachi, on March 2, 2023. — Online
A foreign currency counts Pakistani rupee notes at a shop in Karachi, on March 2, 2023. — Online

KARACHI: The rupee posted minor gains on Friday due to a slowdown in dollar-related outflows and positive sentiment following the International Monetary Fund's readiness to support Pakistan.

Finance Minister remarked that a major devaluation of the currency is unlikely, given the stable foreign exchange reserves, which further supported the rupee. In the interbank market, the rupee ended at 278.30, up from its previous close of 278.43.

However, the rupee fell slightly in open market trade, trading at 279.68 per dollar, compared with 279.66 on Thursday. Dealers stated that the rupee gave up its losses from the previous session due to little demand for dollars from importers and companies. The country's improving external account, stable foreign exchange reserves, and the IMF's statement all contributed to boosting market sentiment.

Even after repaying a $1 billion Eurobond last week, the State Bank of Pakistan's foreign exchange reserves remained above $8 billion. The SBP’s governor, Jameel Ahmad, informed foreign investors at the IMF-World Bank Spring meetings that Pakistan’s external sector has stabilized, as reflected in the sharp reduction in the current account deficit to $1 billion during July-February FY24, down from $3.8 billion in the same period last year.

The improvements in the external account have allowed the SBP to more than double its FX reserves from $3.1 billion in January 2023 to around $8 billion on April 12, 2024, despite the repayment of the $1 billion Eurobond on the same day. Ahmad also noted that the SBP’s forward liabilities have significantly reduced from $5.7 billion in January 2023 to $3.4 billion in February 2024.