June 20, 2023 (MLN): The Pakistani rupee (PKR) on Tuesday continued the winning streak as the local unit has recovered by a significant 5 rupees against the greenback compared to yesterday's close of PKR 295 per USD.
The local unit was quoted at PKR 290/292 [12:48 PST] with the trades being reported at 291 per USD while in the interbank trade, PKR is being traded at 287.4/287.15 per USD.
It is pertinent to note that the open market and interbank gap have significantly narrowed down. The dollar is currently trading only 0.9% above the interbank rate, compared to approximately 9.34% on May 30.
USD/PKR open market 1 Month data
This can be attributed to several factors, such as higher foreign remittances, current account surplus for the month of May 2023 surging 3.26x MoM to stand at $255 million compared to the surplus of $78m in April 2023, and better economic stability, which have contributed to this favorable trend.
Earlier, the credit rating agencies Fitch and Moody’s Investors Service expressed concerns over Pakistan’s low foreign exchange reserves, warning that it would make it difficult for the country to repay foreign loans in June.
However, on Friday night, the State Bank of Pakistan confirmed the receipt of $1 billion, which was subsequently repaid to the China Development Bank on Monday.
Finance Minister Ishaq Dar announced that the loan facility had been successfully rolled over within a week after the bank agreed to refinance it.
Additionally, a $300 million loan was also paid back to the Bank of China on Friday, with hopes of refinancing the amount within three to five days.
The remaining $1 billion, constituting a state-to-state payment to China, would be divided into two equal installments of $500 million and renewed accordingly.
Ishaq Dar expressed gratitude that things were progressing smoothly and addressed those who had speculated about the situation in the media.
He recalled how certain rating agencies had predicted the possibility of default due to significant repayments scheduled for May and June.
Moreover, Ishaq Dar assured that the 9th review of the IMF program will be completed this month on Thursday.
“Our talks with the IMF have not concluded yet. Thus, in my view imf program has not ended yet," he added.
Talking about IMF's conditions, he said that almost all the conditions have been fulfilled including the foreign exchange market which is working freely.
He further assured that there is no issue with payments till June 30. "We are fully prepared to make timely payments till June 30.”
Notably, since the all-time high of 312 on May 30, PKR has appreciated by 7.59% or 22 rupees in the open market.
USD/PKR open market 1 Year data
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Posted on: 2023-06-20T12:42:33+05:00
