Rupee rises after IMF approves $7bn loan

KARACHI: The rupee posted modest gains on Thursday after the International Monetary Fund approved a 37-month $7 billion loan to cash-strapped Pakistan.The rupee rose 0.05 per cent to close at 277.68 against the dollar in the interbank market. On Wednesday, the rupee closed at 277.84.

In the open market, the rupee gained slightly versus the greenback. It was trading at 280.30 per dollar, compared with 280.33 in the previous session.

Analysts said the IMF’s board approval for a new loan programme for Pakistan ended uncertainty, boosting investor sentiment about the country’s economy. The local unit and the balance of payments are expected to benefit from the IMF’s programme.

The IMF approval had been pending for many months and created uncertainty in the financial markets. This brings much-needed confidence in the economic outlook going forward, according to a note from Chase Securities.

Another significant development was that the Asian Development Bank kept its projections for Pakistan’s GDP growth and inflation at 2.8 per cent and 15 per cent, respectively, for the fiscal year 2025.

However, it also cautioned that the new government would face difficulties because of high levels of institutional and political unrest as well as the possibility of social unrest due to a sharp decline in real incomes.