Pakistani rupee up 2.4% this week as IMF approves bailout deal

KARACHI: The Pakistani rupee appreciated by 2.4 percent this week following the approval of a $6 billion bailout package by the executive board of the International Monetary Fund, traders said, expecting the dollar to depreciate further in the coming days as funds poured in from international creditors and lenders.
The rupee, which traded at 161 against the US dollar by the close of last week, was trading at 156-157 in the open market on Friday, according to currency dealers.
In the interbank market, the rupee appreciated from 158.25 at last week’s closing to 157.70 in intraday trading on Friday against the dollar, according to the Exchange Companies Association of Pakistan.
The IMF accord foresees a “market-determined” rate for the rupee, which previously has been managed by the central bank in a de facto controlled float.
“There is not much movement in the dollar trade today (Friday) as the New York market was closed due to the US Independence Day [July 4],” said Malik Bostan, the president of the Forex Association of Pakistan. “However, the rupee is gaining strength after the IMF deal and [$500 million] inflows from Qatar.”
Last month, gas-rich Qatar announced $3 billion in new investments in Pakistan in the form of deposits and direct investments in Pakistan.
Pakistan’s total liquid foreign reserves stood at $14.44 billion on June 28, 2019, the statement said.
On Wednesday, the IMF executive board approved a three-year Extended Fund Facility (EFF) for Pakistan to support the country’s economic reform program.
The Executive Board’s approval allows an immediate disbursement of $1 billion while the remaining amount will be phased over the duration of the program, subject to four quarterly reviews and four semi-annual reviews, according to the IMF.
Pakistan’s de facto finance minister Dr. Abdul Hafeez Shaikh told reporters on Thursday that the first installment of the IMF loan would be received by July 8, 2019.
The IMF says that the approval of its bailout will unlock around $38 billion in additional loans from Pakistan’s international partners to meet its large financing needs in the coming years.