The Pakistani rupee witnessed a significant surge in the interbank market on Tuesday, following a breakthrough deal with the International Monetary Fund (IMF).
Bullish Trend in Currency Market Inspired by Pakistan Stock Exchange (PSX)
Taking inspiration from the remarkable 5.9% surge in the Pakistan Stock Exchange (PSX) during the first trading session on Monday, the currency market experienced a bullish trend, further boosting investor confidence.
IMF’s Financial Package Brings Respite to Pakistan’s Economy
In an effort to avoid the looming threat of default, Pakistan successfully secured a $3 billion short-term financial package from the IMF, providing much-needed relief to its struggling economy.
Decline of Greenback’s Value in Interbank Trading
The US dollar faced a notable decline in the interbank market, with its value dropping by Rs11.1, trading at Rs274.98. This comes after it closed at Rs285.99 on June 27, just before the Eid holidays.
A Positive Downward Trend for the Dollar
Following its peak on May 11 at a record-high Rs290.93 in the interbank market, the US dollar has shown a promising downward trend, experiencing a significant drop of Rs23.43.
Financial analyst Mohammad Sohail shared his insights, expressing that the rupee has managed to gain up to 3%, in line with market expectations.
Growth Sustainability and Upcoming Disbursements
The sustainability of the rupee’s gains hinges on the timely disbursement of funds promised under the IMF deal. The government asserts that the funds will be disbursed by mid-July, and additional payments ranging from $4 billion to $5 billion are expected from Saudi Arabia or the Islamic Development Bank.
Sohail emphasized that if these payments materialize as planned, the Pakistani rupee is likely to maintain its current strength and stability. However, any delays in these payments could potentially increase pressure on the currency.
Prospects for the Rupee’s Future Stability
Relying on the government’s claims that Pakistan’s reserves will reach $14 billion by the end of July or the beginning of August, analysts predict the rupee’s stabilization around the range of 270 to 280.
In conclusion, with the IMF deal providing a much-needed financial boost and the positive outlook for Pakistan’s reserves, the Pakistani rupee seems poised for stability and growth in the coming days. However, it remains essential to monitor the timely disbursement of funds and potential external financial support to ensure sustained positive trends in the currency market.