- The rupee fell 1.78, or 0.6% this week, posting a second weekly decline.
- In the last trading day, the rupee lost 48 paisa to an intraday high of 280.5.
- The IMF will review Pakistan’s economic progress after its arrival on November 2.
KARACHI: Pakistan’s rupee is likely to recover some of its losses against the US dollar next week if the country gets the go-ahead from the International Monetary Fund (IMF) for the next tranche of its loan programme, The news he said, citing foreign exchange dealers on Sunday.
The local currency posted its second straight weekly decline this week as it fell 1.78 rupees, or 0.6%, to 280.57 per dollar this week.
As the dollar strengthened globally on signs of a US economic recovery, the rupee hit an intraday low of 280.5 on Friday, which remains the lowest level since early September.
In the last trading day, the rupee lost 48 paisa, touching an intraday high of 280.5 and a low of 280.15 against the dollar.
Analysts said the rupiah weakened against the US dollar over the coming week as the country awaited the approval of the next tranche of its $3 billion loan from the IMF.
The rupee’s performance is closely linked to the IMF programme, which provides Pakistan with financial support under a standby loan approved in July this year to address the balance of payments crisis and implement structural reforms.
The IMF is set to review Pakistan’s progress on its economic targets on November 2 and then release the next tranche of around $700 million.
The rupee’s depreciation was also driven by higher import payments and lower export receipts, as well as geopolitical tensions in the Middle East dampening sentiment among foreign investors and exporters, said Tresmark, a currency consultancy.
“The rupiah will likely strengthen again once the IMF tranche is approved, but until then it will be anchored at the 280 level,” Tresmark said in its weekly review. “With the current conflict in the Middle East, exporters are reluctant to sell futures.”
While expectations are high that the rupee will strengthen after the IMF approves the next tranche for Pakistan, fears have been raised about its long-term strength after Goldman Sachs predicted that the rupee’s good performance would be short-lived.
“The performance of the best-performing currency, the rupee, will be short-lived amid funding risks and the upcoming elections,” according to a Goldman Sachs analyst.
“The recent appreciation of the Pakistani rupee is likely to be short-lived given rising interest costs and only short-term arrangements with the IMF and bilateral financing to support the external balance,” analysts led by Kamakshya Trivedi wrote in a report on Wednesday. “The market will continue to demand a premium for the Pakistani rupee ahead of the elections.”