In a positive development for Pakistan’s economy, the Pakistani rupee has gained value against the US dollar, with experts attributing the increase to the recently finalized standby agreement with the International Monetary Fund (IMF).
Malik Bostan, Chairman of the Exchange Companies Association of Pakistan (ECAP), expressed optimism about the agreement and predicted a further decrease in the dollar’s value.
Bostan anticipated that once the interbank market opened on Tuesday, the value of the US dollar would continue to decline, potentially reaching Rs275 in the coming days. He attributed this expected decline to the anticipation of financial assistance from global institutions, in addition to the IMF deal, which would reduce the demand for the dollar.
On Monday, the rupee appreciated by Rs5 against the US dollar, reaching Rs285 in the open market. The stock market also experienced a surge, crossing the 2,000 mark. However, due to the bank holiday, the interbank rate was not available.
Zafar Paracha, ECAP General Secretary, emphasized that the signing of the IMF agreement and the potential grants from other countries created a prevailing downward sentiment. Paracha predicted an additional Rs5 depreciation of the dollar on Tuesday.
While the foreign exchange reserves and the IMF grant are expected to provide some relief, Paracha cautioned that further measures might be necessary to ensure the long-term stability of the rupee. He urged the government to prioritize controlling the dollar surge and warned that without significant spending cuts, the country would continue to face economic challenges, keeping the rupee under pressure.
Pakistan recently secured a $3 billion short-term financial package from the IMF, providing much-needed relief to the struggling economy. This funding, spread over nine months, exceeded expectations and came as Islamabad awaited the release of the remaining $2.5 billion from a previously agreed $6.5 billion bailout package that expired last week.
Overall, the positive outlook for the Pakistani rupee reflects the hope generated by the IMF agreement and potential financial assistance from other global institutions. However, the government is urged to implement additional measures to ensure long-term stability and address the country’s economic challenges.
