- The rupee fell 1.78 or 0.6% this week, its second weekly decline.
- On the last trading day, the rupee fell by 48 paise and reached an intraday high of 280.5.
- The IMF will review Pakistan’s economic progress after its arrival on November 2.
KARACHI: The Pakistani rupee could recover some of its losses against the US dollar next week if the country gets the green signal from the International Monetary Fund (IMF) for the next tranche of its loan programme. news The report was made on Sunday quoting currency dealers.
The local currency recorded its second consecutive weekly decline this week as it fell Rs 1.78 or 0.6% to 280.57 per dollar.
As the dollar strengthened globally due to signs of economic recovery in the US, the rupee on Friday hit a low of 280.5, its weakest since early September.
On the last day of trading, the rupee fell 48 paise against the dollar, hitting an intraday high of 280.5 and low of 280.15.
Analysts said the rupee weakened against the US dollar over the past week as the country awaited approval for the next tranche of a $3 billion loan from the IMF.
The rupee’s performance is closely linked to the IMF programme, which is providing financial assistance to Pakistan under the additional line of credit approved in July this year to overcome its balance of payments crisis and implement structural reforms.
The IMF will review Pakistan’s progress on its economic targets on November 2 and then release the next tranche of about $700 million.
Currency advisory firm Tracemark said the rupee’s devaluation was due to higher import payments and lower export receipts as well as geopolitical tensions in the Middle East, which weakened the sentiment of foreign investors and exporters.
“The rupee will strengthen again after the approval of the IMF tranche, but till then it will remain stable at 280 levels,” Tracemark said in its weekly review. “With the current Middle East conflict, exporters are reluctant to sell forward contracts.”
Although expectations are high that the rupee will strengthen after the IMF approves the next tranche for Pakistan, apprehensions have been expressed about its long-term strength after Goldman Sachs predicted that the rupee’s good performance would be short-lived.
According to an analyst at Goldman Sachs, “The performance of the rupee, the best performing currency, will be short-lived in the backdrop of financial risks and the upcoming elections.”
“Given rising interest costs and only short-term arrangements with the IMF and bilateral financing to support external balances, the recent appreciation of the Pakistani rupee will be short-lived,” analysts led by Kamakhya Trivedi wrote in a report on Wednesday. “The market will continue to require a premium for the Pakistani rupee ahead of the elections.”