KARACHI: The Pakistani rupee closed modestly stronger on Friday, aided by positive sentiment due to an over $1 billion increase in foreign exchange reserves. The rupee closed at 281.97 against the US dollar in the interbank market, up from its close at 282.06 in the previous session.
The local unit remained flat in the open market. It traded at 284.15 per dollar, unchanged from the previous session.
Dealers noted that positive sentiment prevailed in the market as Pakistan’s central bank’s foreign exchange reserves rose to a four-month high of $11.45 billion as of May 16. This increase followed the receipt of the second tranche of $1.023 billion from the International Monetary Fund (IMF) as part of a $7 billion loan programme. During the reporting week, the reserves of the State Bank of Pakistan (SBP) increased by $1.043 billion.
According to analysts, market participants are eagerly monitoring the fiscal year 2025-26 federal budget that will be presented on June 2. “While the government is considering relief measures and sector-specific incentives, any such proposals hinge on the IMF’s approval,” said Chase Securities in a note.
“The Fund is expected to scrutinise the revenue impact of these concessions and seek clarity on how any shortfall will be offset, given the limited avenues available for additional tax collection,” it added.
