The Pakistani rupee (PKR) reversed losses and posted gains against the dollar during interbank trade on Wednesday, going as high as 261.3 against the greenback.
At close, the rupee appreciated by 0.24 percent and suspended movement at 261.9 after gaining 61 paisas against the greenback.
The local unit was initially bearish against the dollar and opened trade at 262.24 in the open market. By midday, the greenback went lower against the rupee to around 261.375. After 1 PM, the local unit was largely stable against the top foreign currency before the interbank close.
The rupee reversed losses against the dollar today after the China Development Bank (CBD) approved a re-financing loan of $700 million for Pakistan. With an agreement in place on re-financing a loan of $700 million from the China Development Bank (CDB) for Pakistan, the reserve count is expected to show a slight jump in next week’s forex review.
Pertinently, foreign exchange reserves held by SBP were recorded at $3.192 billion, up $276 million compared to $2.916 billion on February 3, remaining at their lowest since February 2014.
The rupee is still down over Rs. 26 since its record-breaking single-day drop of Rs. 25 in the last week of January after the currency was finally ‘freed’ against the US dollar in the inter-bank market. As per market trends and fiscal developments observed today, the PKR has gained 61 paisas today.
Money changers say in the event of an IMF bailout success, the rupee could gain some ground until the end of the ongoing financial year 2022-23. However, it is worth mentioning that the lender has shown a low tolerance for Pakistan for deviations from its program targets regarding fiscal adjustments, foreign exchange policy, and energy sector reforms.
The IMF recently highlighted the need for assurances of bilateral financing commitments from Pakistan’s other creditors – notably, Saudi Arabia, the UAE, and China. This requirement supports analysts’ concern that Pakistan’s external-debt viability relies heavily on its ability to secure large debt rollovers, and any uncertainty in that regard could have a negative impact on the PKR.
The PKR was bullish against most of the other major currencies in the interbank market today. It gained Rs. 1.45 against the Canadian Dollar (CAD), 7 paisas against the Saudi Riyal (SAR), 17 paisas against the UAE Dirham (AED), Rs. 1.04 against the Euro (EUR), and Rs. 2.00 against the Australian Dollar (AUD).
Conversely, it lost Rs. 1.52 against the Pound Sterling (GBP) in today’s interbank currency market.