Khashif Talks Unlock Knowledge & Explore with Khashif Talks!
In a positive turn of events, the Pakistani currency has witnessed a strengthening trend against the US dollar in the wake of the IMF executive board’s approval of a $3 billion loan program for Pakistan. The currency improved by Rs2.14 to Rs275.34 against the greenback in the interbank market on Thursday morning.
Early reports indicated a significant surge, with the currency briefly gaining Rs5.47 and recovering to Rs272 against the dollar. However, it later settled at the current value of Rs275/$. This marks the third consecutive day of upward momentum for the Pakistani rupee, with a cumulative rise of approximately Rs4.
The immediate release of the first tranche of $1.2 billion by the IMF executive board and the deposit of $1 billion by the UAE in the State Bank of Pakistan have provided a much-needed boost to the country’s foreign exchange reserves. These capital inflows have contributed to an overall improvement of $3 billion in the reserves, bolstering the nation’s capacity to meet its foreign debt obligations.
The positive impact of the IMF loan and the fresh capital inflows is expected to stabilize the Pakistani currency around the current value. Experts predict that the currency will remain within the range of Rs275 to Rs280 against the US dollar in the short term. However, prevailing high demand for foreign currency in the domestic economy, as well as upcoming import requirements and foreign debt repayments, may influence the currency’s stability.
Pakistan is gradually reopening imports under the new IMF conditions, which is likely to increase the demand for dollars. Additionally, the country has significant foreign debt repayments totaling $9.5 billion by the end of December 2023. Despite these challenges, experts project that the foreign exchange reserves will improve to $7.5 billion by the end of 2023.
IMF Approves $3 Billion Bailout Program to Support Pakistan’s Economic Stabilization
The combination of improved reserves, ongoing capital inflows, and efforts to meet debt obligations provides a positive outlook for Pakistan’s economic stability and foreign exchange market.
