Rupee hits six-month high against dollar on foreign inflows

KARACHI: Rupee rose to almost six-month high against the US dollar on Monday as Asian Development Bank (ADB) committed $1.3 billion worth of loans for Pakistan to help the country build up foreign exchange reserves and support its energy sector reforms.

The rupee closed at 154.96 to the dollar in the interbank market, the highest since June this year. It had finished at 155.06 in the previous session.

Dealers said the statement by the minister for economic affairs “that Pakistan will receive loan from the ADB” lifted hopes of a brighter outlook for the balance of payments and economy. Analysts said the Pakistani currency was appreciating day by day against the greenback from last month.

“The continuous growth in the pair is mainly due to the ample supply of dollars in the market, improved economics condition and stable outlook rating from international rating agencies,” said Yaqoob Abubakar, an analyst at Tresmark, an application that tracks financial markets.

“We foresee that the positive momentum will continue till the end of this year that will take to USD/PKR around 153.50 to 154.”

Hammad Azhar, the minister for economic affairs in a tweet, said the Economic Affairs Division and ADB have signed policy based loans of $1.3 billion on Monday for energy and financial sectors’ reforms.

“The sums will be disbursed (Monday) and will help bolster reserves and strengthen our economic outlook. Single largest disbursements in one day to any country by ADB,” Azhar added. However, till the filing of this story, the central bank did not confirm that it had got the disbursement from the ADB.

The chief spokesman for the State Bank of Pakistan said the central bank was likely to receive these inflows from the ADB, but would confirm after receiving of it. The expected inflows will increase the SBP’s foreign currency reserves to more than $10 billion.

The SBP’s foreign currency reserves rose by $431 million to $9.112 billion as of November 29. The reserves held by the SBP increased by $1.8 billion in the first five months of the current fiscal year.

It is also worth noting that Pakistan managed to pay around $1 billion on the maturity of Sukuk bond last week.