- In the interbank market, the US dollar closed at Rs 268.83.
- At the close of trading, the rupee lost 0.94 points.
- There is a link between the rupee’s movement and the IMF agreement, according to analysts.
As the market awaits a resolution to the ongoing negotiations between the government and the International Monetary Fund (IMF), the Pakistani Rupee remained unchanged against the US Dollar on Thursday. Two factors are responsible for the stability of the local currency: the market’s optimism regarding the continuation of IMF negotiations, and the government’s efforts to reduce market speculation.
Since the lifting of the currency cap on January 25th, the rupee has declined by 14.1% against the dollar from its previous close of Rs 230.89. In total, the rupee has declined by 16% this year, becoming the worst performing currency in the region.
The Pakistani central bank had foreign exchange reserves of $3.7 billion as of January 20th, which would only cover three weeks’ worth of imports. The country is seeking foreign financing in order to avoid default.
Despite low export activity, exporters have taken out more loans, suggesting that they borrowed in the local currency at high rates without receiving export proceeds. In their rush to repay high-interest loans and secure raw materials before prices rise, exporters may not wait for further depreciation of the rupee in order to repay high-interest loans.