Pakistani rupee again pulls down US dollar by big margin.
The Pakistani rupee has managed to break the US dollar’s upward trend by pulling it down following a hike in POL prices and an increase in the policy rate by the State Bank of Pakistan.
According to forex dealers, the US currency fell significantly during the morning session of interbank trading on Monday, depreciating by Rs1.76. Today, the US dollar was trading at Rs198.
On Friday, the emboldened Pakistani rupee rocketed past the US dollar by Rs2.25 and closed at Rs199.76.
The rupee, which has been struggling against the US dollar for the last three weeks, gained strength on Thursday night when the government, in order to restart its loan programme with the IMF, began implementing its directives and significantly increased the prices of petroleum products.
The government announced a Rs30 per lire increase in the price of petroleum products.
Late Wednesday, the International Monetary Fund (IMF) postponed the restart of Pakistan’s stalled $6 billion External Financing Facility (EFF). In a statement, the Fund emphasised the elimination of subsidies on petroleum products and electricity, among other conditions, as a requirement for the program’s revival.
However, Nathan Porter, the IMF Mission Chief for Pakistan, later stated that the Fund held constructive discussions with Pakistani officials in order to reach an agreement on policies and reforms. “The mission has held highly constructive discussions with Pakistani authorities in order to reach an agreement on policies and reforms that will lead to the completion of the pending seventh review of the authorities’ reform programme, which is supported by an IMF Extended Fund Facility arrangement.”
During a press conference on Saturday, Finance Minister Miftah Ismail stated that rising petroleum product prices strengthened the rupee and boosted the stock market.
Miftah explained that if the government had not raised POL prices, the economy would have suffered and inflation would have rebounded.
He stated that the fund, which was supposed to provide $3 billion, was asked to extend the programme by one year and provide an additional $2 billion, with the country expecting around $5 billion from the fund.
He also revealed that the staff-level agreement with the IMF would be signed next month (June).
Miftah stated that the programme with the Fund is important not only because the country receives funds from the Fund but also because it opens the door to receiving funds from other multilateral organisations such as the World Bank and the Asian Development Bank.
He stated that once unlocked by the IMF, Pakistan would receive funds from multilateral organisations, adding that $8.9 billion was already in the pipeline from the World Bank.
