Rupee All Red Against US Dollar After IMF Leaves Without A Deal in Place

The Pakistani rupee (PKR) reversed gains and reported losses against the dollar during interbank trade on Monday, rising as high as 267 against the greenback as bears took over market movements following last week’s talks between Pakistan and the International Monetary Fund (IMF).

At close, the rupee depreciated by 0.46 percent and suspended movement at 269.44 after losing 16 paisas against the greenback.

The local unit was all red against the dollar and opened trade at 268.75 in the open market. By midday, the greenback went higher against the rupee to around 271 After 1 PM, the local unit parried a few losses against the top foreign currency before the interbank close.

Today’s losses come after talks between Pakistan and the IMF concluded last week without a staff-level agreement to unlock the lender’s bailout of over $1.1 billion. Money changers said today’s losses are the same trend-setting bears that have continued to plague the exchange rate counters since May 2022 and will continue on a similar and straightforward trajectory throughout this financial year.

Moody’s Investor Services (Moody’s). said on Friday that Pakistan’s external position is under significant stress, following delays in securing official sector financing which has driven a continued decline in Pakistan’s foreign exchange reserves.

Moody’s stated that while the IMF noted that considerable progress was made during the visit on policy measures to address domestic and external imbalances, there is no certainty yet on whether, and if so when, IMF financing will be forthcoming.

The financing from IMF, which is likely to also catalyze funding from other multilateral and bilateral partners, is crucial to alleviate Pakistan’s liquidity stresses. Revenue-raising measures will likely be among the prior actions that the IMF requires before releasing the next tranche of financing. However, elevated social and political risks compound the government’s difficulty in implementing reforms, including revenue-raising measures, that would improve the country’s fiscal position and liquidity position.

The PKR was bullish against some of the other major currencies in the interbank market today. It gained 42 paisas against the Australian Dollar (AUD), Rs. 1.81 against the Pound Sterling (GBP), and Rs. 1.82 against the Euro (EUR).

Conversely, it lost four paisas against the Saudi Riyal (SAR), four paisas against the UAE Dirham (AED), and Rs. 1.25 against the Canadian Dollar (CAD) in today’s interbank currency market.