Rupee gains in interbank market

Our Correspondent
Friday, May 26, 2023

KARACHI: The rupee on Wednesday posted gains against the dollar in the interbank market on a Finance Minister Ishaq Dar’s assurance that the country would not default despite a delay in the IMF bailout programme.

The local currency rose 0.49 percent or 1.39 rupees to close at 285.74 versus the dollar in the interbank market. In the open market, the domestic currency ended at 309 per dollar, unchanged from the previous close.

Dealers said the rupee had been under pressure for the past two days, but investors' fears were calmed by Dar’s assurance that the nation was not on the verge of a financial crisis and "will absolutely not default."

“Regular import payments were made therefore there was no decrease in importers' demand for the dollars. The currency appreciated today as a result of a shift in market sentiment. The minister's remark received a favourable response from the market,” said a currency dealer.

The IMF programme seems to end on June 30 without being resumed because of time constraints. The programme reviews were not timely completed by the coalition government. Despite the government having completed all prior actions, the ninth review of the IMF programme was unable to be finished. Earlier this month, the IMF stated that before achieving a staff-level agreement, Pakistan has to bridge a significant financing gap.

Investors now anticipate that, in the event that the IMF programme is not resumed, the government will present a backup plan.

According to reports, Pakistan expects China to roll over more than $2 billion in debt that is due next month. The country’s foreign debt is due this month and in June to the tune of around $3.7 billion.