Rupee likely to gain further

KARACHI: After hitting a two-month high in the outgoing week, the rupee is likely to gain further in the coming week on positive sentiments generated by the release of $1 billion by International Monetary Fund (IMF) and dwindling imports, believed currency dealers.

During the departing week, the local unit closed at Rs.174.48 against the dollar, compared to the closing level of Rs.176.77 in the previous week, gaining Rs2.29 in a week.

IMF resumed Extended Fund Facility (EFF) for Pakistan in the outgoing week, which saw the Pakistani rupee to add strength in its value substantially. Meanwhile, the State Bank of Pakistan (SBP) also announced receiving $1 billion from IMF after its board approved the amount.

Finance Minister Shaukat Tarin announced through his official twitter account about the approval of the board to release the amount. Under EFF, Pakistan has to receive $6 billion from IMF. After receiving $ 1 billion loan tranche, the total amount disbursement under this programme stands at $3 billion so far.

Along with the positive development on the IMF front, the country’s imports also saw some negative growth in the month of January this fiscal, creating positive sentiments in the currency market, dealers said.

“The positive development on the IMF front boosted the positivity in favour of the rupee”, said Zafar Paracha, general secretary at Exchange Companies Association of Pakistan (ECAP).

He said delay in resumption of the IMF programme for the country had put a pressure on the local currency against the dollar when it shed value but its resumption added strength in the value of the Pakistani currency.

Paracha pointed out that high imports of the country in last several month was putting immense pressure on the rupee, which resulted on its depreciation.

However, in the month of January, imports started receding and fetched a positive sign for the local currency.

He stated that the SBP’s regulations for exchange companies to divert the remittances to interbank also helped the rupee to gain strength. The SBP offered a rupee incentive on every US dollar to exchange companies on surrendering 100 percent remittances in the interbank market in a push to boost foreign currency supply.

About the future outlook of dollar-rupee parity, Paracha hoped that the local unit would show resilience against the dollar in the coming week as positive sentiments were strong to the local currency, which would boost its strength against the foreign currency, he envisaged.

He was of the opinion that the dollar was still overvalued against the Pakistani currency by at least Rs10. In view of the economic indicators and positive sentiment in favour of the rupee, the dollar-rupee parity should be between Rs.160 to Rs.165, he believed.