Currency Resists Larger Gains Amid Low Forex

KARACHI: According to the exchange market, the Pakistani rupee is stable and is staying close to its current level, which is just below Rs286 per US dollar. The currency ran into problems as it tried to make big gains on Tuesday, the fourth working day in a row that it was going up.

The value of the Pakistani rupee rose by 0.06%, or Rs0.18, against the US dollar, reaching an 11-day high of Rs285.79 at the end of the day.

The value of the rupee has gone up against the foreign currency by 0.82%, or Rs2.35, over the last four days.

The Exchange Companies Association of Pakistan (ECAP) said that the value of the local currency fell by 0.08%, or Rs0.25, and ended the day at Rs287.25/$ on the open market.

The market thought earlier that the value of the rupee would stabilize around Rs 285 in the short term, but it could fall below Rs 300 by June 2024, the end of the fiscal year.

Low foreign exchange reserves—less than $7.5 billion, which is less than two months’ worth of imports—are making it hard for the currency to make bigger gains.

The country reported a breakeven current account shortfall of $74 million for the second month in a row, but the currency market hasn’t paid much attention to it. It’s interesting that this is happening, especially since monthly imports went up and topped $4 billion in October.

The increase in export revenues and the flow of money from workers sent home offset the rise in imports. This means that the supply and demand of foreign cash have stayed equal, at least for the month.

Pakistan reached a staff-level deal with the International Monetary Fund (IMF) at the end of its first economic review under its $3 billion loan program. This led to a recent period of recovery in the local currency.

Pakistan has met the requirements for the second $700 million loan installment, as shown in this deal. It is expected that the IMF’s executive board will give its final approval for the release of the tranche when it meets on December 7. This payment would bring in more foreign cash, which would help the rupee against the US dollar.