The Pakistani rupee achieved a one-month high, nearly touching Rs285 against the US dollar in the interbank market, marking its fifth consecutive working day of gains.
According to State Bank of Pakistan (SBP) data, the currency appreciated by 0.15%, closing at Rs284.53 against the greenback. Over the past five working days, it has cumulatively risen by 0.39%, amounting to Rs1.11. The Exchange Companies Association of Pakistan (ECAP) reported a 0.17% increase, closing at Rs285.50/$ in the open market.
This positive trend is attributed to the central bank’s reports indicating a rise in foreign exchange reserves, reaching $7.225 billion, with an increase of $77 million in the previous year. Reports suggest that the SBP is actively purchasing surplus supplies of the US dollar from the interbank market. This not only allows the SBP to acquire surplus supplies at an increasing price but also stabilizes foreign exchange reserves, providing cover for two months of imports.
Optimism surrounds the imminent approval by the International Monetary Fund (IMF) executive board for the release of the next tranche of $700 million, expected in December 2023 or January 2024. This approval is anticipated to unlock an additional $1.5-2 billion from other multilateral and bilateral creditors. In mid-November, the IMF staff approved the tranche following the successful completion of the first domestic economic review under the ongoing $3 billion loan program.
Furthermore, the expected influx of multibillion-dollar investments from countries such as Saudi Arabia and Kuwait in mining, agriculture, IT, and telecom sectors, including projects like Reko Diq and a petroleum refinery, is projected to enhance the supply of foreign currency. These developments contribute to the rupee’s remarkable gains, with some currency dealers and politicians believing the rupee has the potential to reach Rs250/$ or even dip below Rs200/$ in the long run.
