Rupee saw no respite on Friday and fell to 209.13 against the US dollar during intra-day trading in the inter-bank market due to market’s panic over revival of the International Monetary Fund’s (IMF) $6 billion Extended Fund Facility (EFF) to Pakistan.
The present government is taking steps to resume the IMF programme and secure the next tranche of loan worth $900 million.
In this regard, the government announced a third hike in the prices of petroleum products on June 15 in less than three weeks, as it looked to quickly appease the IMF that emphasised the termination of energy subsidies.
The local currency also took a hit after the US Federal Reserve announced the biggest rate hike since 1994 and dollar strengthened significantly against global currencies.
At close on Thursday, the local currency had finished with a loss of Rs1.21 or 0.58% to settle at then historic low of Rs207.67.
Talking to Business Recorder, Alpha Beta Core CEO Khurram Schehzad said that the uncertainty surrounding the resumption of IMF bailout is denting sentiment in the currency market.
“The demand for dollars remains high in the market and this factor is driving its value upward against the rupee,” he said. “The local currency will likely witness volatility until the IMF agrees to disburse the next tranche of loan to Pakistan.”
Earlier, Arif Habib Limited Head of Research Tahir Abbas said that the local currency was extending its fall on account of post-budget uncertainty.
Finance Minister Miftah Ismail had earlier said that the government’s budget 2022-23, announced last week, failed to convince the IMF to disburse the next tranche of $6 billion loan programme to Pakistan, and amendments would be needed in the finance bill.
“The finance minister has clearly stated that IMF is not happy with the budget and there will be changes to it,” said Abbas.
“Once the amendments are incorporated in the Finance Act, only then will the rupee stabilise.”
This is an intra-day update
The story was originally published in Business Recorder on June 17, 2022.
