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Rupee maintains winning streak in interbank market

Rupee maintains winning streak in interbank market

KARACHI: The Pakistani rupee continued its upward momentum to hit Rs224.04 against the dollar on Friday, as positive sentiments prevailed in the market over the likely revival of the International Monetary Fund (IMF) programme.

The local unit gained Rs2.11 to close at Rs224.04 to the dollar from Thursday’s closing of Rs226.15 in the interbank foreign exchange market.

Analysts attributed the rupee’s gaining spree to the expected revival of the IMF programme which played a significant role in boosting the investors’ confidence in the local economy.

The local currency began its upward momentum after the Army Chief of Pakistan requested the US officials for their cooperation in the early resumption of the IMF programme, they added.

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Further, the reports of Pakistan fulfilling all prior conditions of the IMF to make possible the disbursement of $1.2 billion under the Extended Fund Facility (EFF) programme, provided further relief to the market.

The resumption of the programme is also likely to pave the way for Pakistan to attract funds from other multilateral lender institutions and friendly countries. Likewise, the trade deficit came in at $2.64 billion in July, down 47 per cent or $2.32 billion on a month-on-month basis.

However, the narrowing foreign exchange reserves of the country pose a constant threat to rupee stability. The foreign currency reserves held by the State Bank of Pakistan (SBP) recorded a decline of $190 million to clock-in at $8.38 billion during the week ended on July 29, compared with $8.57 billion on July 22.

The overall liquid foreign currency reserves held by the country, including net reserves held by banks other than the SBP, stood at $14.20 billion. The net reserves held by banks amounted to $5.82 billion.

The country’s current account deficit rose 531 per cent to over $17 billion during the fiscal year 2022 due to massive increase in goods import bill. Overall, the current account deficit was $17.4 billion during the fiscal year 2022, compared with $2.8 billion in the fiscal year 2021, depicting an increase of $14.6 billion.

The local currency remained under pressure since the start of the current fiscal year. The rupee lost Rs19.19 or 9.39 per cent from Rs204.85 to dollar on June 30, 2022 to the current level of Rs224.04.

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At the open market, the buying and selling of the dollar was recorded at Rs218 and Rs226 at 4:00pm PST.

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