KARACHI:
The Pakistani currency on Monday fell by Rs 0.09 to close at Rs 278.30 against the US dollar in the interbank market as the currency moved on both sides of the fence ahead of securing the next International Monetary Fund (IMF) loan programme.
The currency has continued to move in a narrow range of Rs 278-278.50/$ in recent weeks, indicating that it has remained largely stable for some time amid “economic engineering” such as import control.
According to State Bank of Pakistan (SBP) data, the rupee had closed at Rs 278.21 against the dollar on Friday.
Earlier, the currency maintained its upward trend for quite some time. However, authorities at the highest level came under fire as multilateral institutions suggested that the currency should move both ways when market forces determined the rupee-dollar rate.
Tresmark recently described the Pakistani currency’s level of Rs 278.21/$ as “overvalued” and predicted that the rupee will start depreciating from July 2024 onwards.
He said the currency would come under pressure whenever Pakistan scaled up imports to its true potential and allowed full repatriation of profits and dividends from foreign companies to their overseas headquarters.
It is not low foreign exchange reserves that lead to low economic activity, but rather the opposite, according to the treasury firm.
Cumulatively, the currency has gained 10.35%, or Rs 28.80, in the last eight-and-a-half months compared to its record low of Rs 307.10/$ in the first week of September 2023.
The Exchange Association of Pakistan (ECAP) said the rupee depreciated by Rs 0.12 on a daily basis to close at Rs 279.48/$ in the open market.
Recently, an IMF team returned to its office after concluding staff-level talks with Pakistan on a new loan program with indications that the country had made significant progress in securing the loan package.
Published in The Express Tribune, May 28u2024.
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