In the inter-bank market, the Pakistani rupee dropped by 0.13% or Rs0.38 to Rs283.50 against the US dollar, ending the currency’s two-day winning streak. Market reports indicate that the demand for the dollar slightly increased after a long weekend spanning four days.
Although many had expected the rupee’s value to continue its upward trend following the removal of the depositing condition of up to 100% advance payment for imports, experts suggest that this lifting of the cash margin condition will not make a significant difference as Pakistan’s foreign currency reserves are critically low at $4.6 billion. The country may only be able to finance imports for about a month with these limited reserves. Experts also do not expect the revival of the IMF’s program anytime soon as Pakistan still needs to take financial commitments of $6-7 billion from friendly countries, which have given a cold response due to the country’s heightened political crisis.
The rupee had earlier recovered by 0.28%, or Rs0.81, over two days, reaching Rs283.20 against the greenback, according to SBP data. However, the domestic currency hit an all-time low close at Rs285.09/$ in the first week of February 2023 after global lending institutions expressed concern about continued government control over the rupee-dollar parity.
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To revive the IMF’s program, the Pakistani government has taken several tough decisions, including reinstating the market-based exchange rate, increasing energy tariffs, and presenting a mini-budget of Rs170 billion. However, the IMF always comes up with a new condition every time Pakistan approaches it.