The Pakistani rupee started showing signs of recovery on Thursday as it gained 4.60 rupees against the US dollar to hit 207.33 rupees in the interbank market, finally breaking the two-week downward streak.
The local currency recovered 2.17% to Rs207.33 around 1pm from Wednesday’s close at Rs211.93.
The significant rally in the local currency follows progress made by the International Monetary Fund (IMF) after resuming its $6 billion lending program.
In addition, China renewed a loan worth $2.3 billion that had been on hold for four months.
Under the new circumstances, Pakistan’s foreign exchange reserves have improved to over $11 billion, bolstering the country’s ability to make international payments.
Additionally, international oil prices have fallen below $110 a barrel in global markets, from above $120 a barrel a few days ago. The drop in the world price of oil is another positive sign for Pakistan, as it relies heavily on imported energy to meet local demand.
Lily Rupee gains ground against dollar after IMF news
Earlier, the national currency lost 34% (Rs55) over the past year to hit an all-time low of Rs211.93 on Wednesday against Rs157.54 against the greenback on June 30, 2021.
Pakistan on Tuesday announced a “package deal” with the IMF over next year’s budget, which had seen its size rise to 9.9 trillion rupees as the government agreed to reintroduce the tax on people earning up to to 100,000 rupees and petroleum tax from July 1.
The two sides agreed to gradually impose a petroleum tax of Rs 50 per liter – the first tranche of Rs 10 per liter from July, then Rs 5 per liter from August until it reaches the maximum threshold of Rs 50 per liter by March 2023.
“We have locked the budget for the financial year 2022-23 in consultation with the IMF and now the Fund will consult with the State Bank of Pakistan on the monetary targets,” Finance Minister Miftah Ismail told reporters.