The rupee further recovered against the dollar on Thursday, gaining Rs4.7 in the interbank market, with analysts attributing the development to the announcement of a $2.3 billion loan from Chinese banks.
According to the Forex Association of Pakistan, the rupee was valued by Rs4 to reach Rs206.50 at 12:37pm from the previous day’s close of Rs210.50.
The rupee then closed at Rs 207.23 and rose by Rs 4.7 from Wednesday’s close at Rs 211.93, according to the State Bank of Pakistan.
Mettis Global Director Saad Bin Naseer said the rupee’s correction was “a long time coming.”
“With news of foreign exchange inflows from China and an imminent deal with the International Monetary Fund (IMF), we believe the rupee will gain momentum in the coming sessions,” he said. Dawn.com†
“If inflows rise, we expect exporters – who have kept their earnings abroad – to panic and repay their earnings given the appreciation of the rupee against the dollar,” he added.
Komal Mansoor, head of research at Tresmark, said market sentiment had reversed due to the “influx of positive news”.
“Exporters have also started selling dollars in spot and forwards. A gradual strengthening of the rupee will encourage them to sell more, improving liquidity,” she said.
Analysts believe some exporters are still waiting for actual flows before taking action, she added.
Zafar Paracha, a currency trader, said today was “another good day for the Pakistani economy”. He predicted that the local currency would further recover in the coming days.
He also foresaw that the dollar price would fall by Rs8-10 once the country received the tranche from the Fund.
On Wednesday, Finance Minister Miftah Ismail said Chinese banks had signed an agreement for a loan of about $2.3 billion that would flow into Pakistan’s account within days.
Since February, Pakistan has been pushing for an extension of loans that are due to expire very soon to support the State Bank of Pakistan’s rapidly depleting foreign exchange reserves, which stood at $8.99 billion on June 10.
At the same time, the government had also reached an agreement with the IMF on the federal budget for 2022-23, leading to the revival of the Extended Fund Facility (EFF).