In the interbank market on Monday, Pakistan’s currency, the rupee, recovered substantially against the US dollar following a series of encashments by exporters. As a result, market confidence has increased and the economic outlook has improved for the country.
According to data from the State Bank of Pakistan, the rupee appreciated by 1.28 or 0.46% against the dollar, closing at 275.29 in the interbank market. The open market saw the rupee remain steady at 283.
Last week, the rupee suffered a sharp decline against the US dollar after Prime Minister Shahbaz Sharif expressed difficulty in negotiating with the International Monetary Fund (IMF).
According to the General Secretary of the Exchange Companies Association of Pakistan, Zafar Paracha, the rupee appreciated by up to 6 during intraday trade on Monday. He attributed the recovery to the encashment of payments by exporters and a pressure to sell dollars in the interbank market.
According to Paracha, individuals should sell their dollars for profit-taking in order to improve the country’s foreign exchange reserves, boost its credit rating, and ease negotiations with the IMF. However, he warned that the IMF’s conditions could lead to increased inflation, and the government needs to manage its expenses carefully to avoid a chaotic situation. As a result of the current unstable political climate, he also stressed the need for caution.
On February 9, the staff-level agreement with the IMF will be signed.