KARACHI: The rupee is likely to maintain a steady range of 290 to 301 against the US dollar by December, as analysts predict stability anchored by the prospect of a new International Monetary Fund (IMF) bailout programme as early as June.
In the interbank market, the rupee is currently trading at 278 per dollar.
Assuming that a new IMF programme will be confirmed in the coming months, Topline Research polled important market players to find out their opinions on a few macroeconomic and market variables.
It is interesting to note that, in contrast to polls done three to six months ago, market participants' opinions on the policy rate and the prospect for the rupee/dollar parity have changed six months ahead of time. They are also now more bullish about the stock market.
“No major fall expected in PKR… in response to our question regarding the PKR/USD parity outlook in the interbank market by Dec 2024 after the new IMF programme, 49 percent of the participants anticipate the PKR/USD parity to range between Rs 290-310,” said Topline Securities on Saturday.
“This contrasts with the previous survey conducted 3 months ago in Dec 2023, where 38 percent of participants expected the rupee/dollar parity to be between Rs 290-310 by June 2024."
“Thus, many market players now see some stability in the local currency,” it added.
Notably, in contrast to the 2 percent of respondents who predicted the same range by June in the survey conducted three months prior, 23 percent of participants now anticipate the rupee to trade between 250 and 270 against the dollar by December 2024.
A staff-level agreement with the IMF for a new loan programme is anticipated to be reached by the end of the fiscal year, according to Finance Minister Muhammad Aurangzeb, who also noted that no formal discussions have yet taken place with the Fund.
The finance minister stated that specifics of the deal would be reviewed at the spring meetings and that he would be leading a group to Washington around April 14 to 15. He made this announcement during an appearance at the PSX gong ceremony.
Speaking about the important topic of a new IMF programme, Aurangzeb stated in his most recent correspondence with them that the Fund has been "very receptive" to a "larger and longer programme."
According to reports, the IMF’s executive board has not yet fixed any date for considering the completion of the second review and release of the third tranche of $1.1 billion under the standby arrangement facility. However, the IMF’s board is expected to approve the disbursement by the end of April.
In the interbank market this week, the rupee saw minor gains vs the US dollar. On Monday, the rupee closed at 278.12 against the dollar, but on Friday, it closed at 277.94.
The rupee gradually strengthened versus the dollar due to healthy inflows from remittances and export earnings. In addition, positive sentiment about Pakistan’s economy also supported the local unit.
As of March 22, Pakistan's foreign exchange reserves held by the central bank increased for a third consecutive week, from $8.018 billion to $8.022 billion. That is a modest $4 million increase over the prior week.
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