The Pakistani currency continued its impressive recovery for the second consecutive working day, gaining 0.21% or Rs0.59, against the US dollar in the interbank market on Thursday, reaching Rs286.45.

This surge comes after Finance Minister Ishaq Dar announced that China’s EXIM Bank has rolled over loans worth $2.4 billion, originally due for repayment in FY24 and FY25. This move played a vital role in stabilising the country’s foreign exchange reserves.

Earlier, the central bank granted permission to currency dealers in the open market to import 50% of US dollars in cash from Dubai and Qatar, provided they export surplus foreign currencies (other than US dollars). This resulted in a surge in the supply of the greenback in the retail market. The permission for this arrangement is initially granted for about six months, expiring on December 31, 2023.

The remaining 50% of foreign currency will be imported by the dealers through online transactions into their bank accounts maintained in Pakistan, which will then be surrendered in the interbank market.

In the open market, the currency further rebounded by 0.34% or Rs1, settling at Rs291/$ on Thursday. This reduction in the exchange rate gap to Rs4.55 brings it close to the IMF’s recommended level of 1.25%.

Published in The Express Tribune, July 28th, 2023.

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