Rupee expected to strengthen as IMF tranche approval nears


KARACHI: In anticipation of the forthcoming $700 million tranche from the International Monetary Fund (IMF) within the $3 billion stand-by arrangement, financial experts predict a robust upswing for the Pakistani rupee (PKR) against the US dollar (USD) in the upcoming week, according to a report by The News.

The preceding week witnessed a commendable surge for the local currency in the interbank market, concluding the week at Rs 284.97 to the USD on Friday. Analysts attribute this positive trend to the nation’s augmented foreign exchange reserves, which escalated by $91 million.

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Additionally, the trade deficit exhibited a notable 33 percent contraction on a year-on-year basis for November. However, it is crucial to note that this reduction in the trade deficit primarily stemmed from diminished imports rather than a substantial increase in exports, posing uncertainties about the sustainability of the deficit’s decline.

The prevailing market sentiment aligns with the expectation that the IMF’s board of directors will grant approval for the second tranche of $700 million on Thursday. This potential development is anticipated to propel the USD-PKR exchange rate to the 280-282 range. At this juncture, the central bank is poised to resume purchasing dollars to fortify its reserves.

Analysts contend that the recent surge in the rupee can be attributed to positive economic data and events. Recent statistics reveal that the foreign exchange reserves held by the State Bank of Pakistan (SBP) surged by $77 million, reaching $7.257 billion in the week concluding on November 24. The nation’s overall reserves experienced a $91 million uptick, reaching $12.393 billion. Concurrently, commercial banks witnessed a $14 million increase in reserves, totaling $5.136 billion.

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