The Pakistani rupee continued to recover for the second consecutive day on Thursday, with analysts attributing it to expectations that the government would reach an agreement with the International Monetary Fund (IMF). The local currency was changing hands at Rs268 per dollar in the interbank market at 10:08am, an appreciation of Rs5.33 or 1.95 per cent from Wednesday’s close of Rs273.33, data shared by the Exchange Companies Association of Pakistan (ECAP) showed. Tresmark’s Head of Strategy Komal Mansoor said the rupee’s upward movement was in anticipation that a Memorandum of Economic and Fiscal Policies (MEFP) between the government and the IMF delegation would be finalised today.

“There seems to be broad-level consensus on the reforms between the [finance] ministry and IMF,” she commented. A delegation of the IMF, headed by Nathan Porter, is currently in Islamabad for discussions on the completion of the ninth review of a $7 billion loan programme. The review’s completion would not only lead to a disbursement of $1.2bn from the IMF but also unlock inflows from friendly countries and other multilateral lenders that Pakistan needs to stave off default. Meanwhile, Saad bin Naseer, director of financial data and analytics portal Mettis Global, said he expected the PKR to settle around Rs260 or below per dollar once the IMF programme was revived.

“Estimated calculations [show] the Real Effective Exchange Rate (REER) is close to 90, indicating that the PKR is currently undervalued,” he said. The REER measures the value of a currency in relation to its major trading partners. Naseer said he also expected a significant inflow from export proceeds and remittances once the currency stabilised.

Credit: Independent News Pakistan-INP