The Pakistani currency continued its upward trajectory, reaching a two-month high at slightly over Rs281.50 against the US dollar in the interbank market on Thursday. This marks the second successive working day of gains, supported by the government’s commitment to crack down on currency smugglers and hoarders.

According to the State Bank of Pakistan (SBP) data, the domestic currency strengthened by 0.02%, or Rs0.05, closing at Rs281.67 against the greenback. Over the past five weeks, the currency has cumulatively gained 1.40%, amounting to Rs3.97.

However, the Exchange Companies Association of Pakistan (ECAP) reported a 0.04% drop, or Rs0.11, closing at Rs282.53/$ in the open market. Market discussions suggest that the Special Investment Facilitation Council (SIFC) has reiterated its commitment to taking action against smugglers and hoarders, contributing to an increased supply of foreign currency in the domestic economy.

Read Rupee hits over two-month high against dollar

The rupee is anticipated to maintain its winning streak leading up to the International Monetary Fund’s Executive Board meeting scheduled for January 11, where approval for the next loan tranches of $700 million for Pakistan is expected. Pakistan secured an IMF staff-level agreement in mid-November during the first review of the ongoing $3 billion loan programme, and approval of the loan tranche could unlock an additional $1.5-2 billion financing from multilateral and bilateral lenders.

Recent financial support from a global institution has bolstered Pakistan’s foreign exchange reserves by $852 million to $7.75 billion, contributing to the strengthening of the rupee.

Published in The Express Tribune, January 5th, 2024.

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