On Friday, the Pakistani currency reached a four-and-a-half-month peak at Rs279.04 against the US dollar in the inter-bank market, marking its second consecutive day of gains.
This notable increase in the rupee’s value followed the International Monetary Fund’s (IMF) favorable response to Pakistan’s request to commence formal talks for a new loan program, which occurred as the process of forming a new government nears completion.
Data from the State Bank of Pakistan (SBP) shows that the domestic currency appreciated by 0.08%, or Rs0.25, against the greenback on a day-on-day basis, reversing the slight losses observed in the previous week.
This appreciation translates to a cumulative surge of 10.05%, or Rs28.06, over the past six months since its lowest point at Rs307.10/$ in the first week of September 2023.
In the open market, the rupee also continued its upward trend for the second consecutive day, rising by Rs0.04 and closing at Rs281.70/$, as reported by the Exchange Companies Association of Pakistan (ECAP).
The recent recovery of the rupee has led to a narrowing disparity between the inter-bank and open markets to Rs2.67 (0.95%) over the past two days, compared to a difference of over 1% observed last week. This reduced gap aligns more closely with the IMF’s recommended ceiling of 1.25% (approximately Rs4 at current levels).
Maintaining this difference within the IMF-recommended limit indicates that currency markets are operating based on market forces, such as dealers and traders, rather than government intervention, thus meeting a crucial condition for the IMF loan program.
