ISLAMABAD, Nov 26: The economic managers expect that the rupee will get some part of its lost weight against the US dollar immediately after the International Monetary Fund (IMF) releases the first tranche of $3.1 billion to Pakistan.

The IMF will transfer money to the State Bank of Pakistan’s account in New York shortly and it is expected that the US dollar will lose its value against the rupee which is now equal to over Rs78 in the open market. The dollar is expected to fall to around Rs75.

A senior official in the finance ministry told Dawn on Wednesday that the rupee has over-depreciated in the past few months owing to flight of capital and uncertainties which compelled foreign investors to withdraw funds from Pakistan due to global credit crunch.

“I see the rupee-dollar parity around Rs75. This will be the actual health of our currency keeping in view inflation in our country, vis-ŕ-vis our trading partners,” the officer said while requesting not to be named.

“The reason for improvement in the health of the rupee is because of IMF programme,” the official said.

The rupee recovered 7.2 per cent from a low of 84.40 on Oct 17 last, but lost 21.8 per cent since the beginning of the year.

The early release of the first installment would also help build foreign currency reserves to enable Pakistan to pay back dollar-denominated government bonds that expire early next year.

According to the official, the IMF loan will immediately boost Pakistan’s dwindling foreign currency reserves, which have also resulted into a steep decline in the value of the rupee.

With all these flows and measures, the State Bank of Pakistan (SBP) forex reserves are projected to reach $8.591 billion by the end June 2009. It will further improve to $11.291 billion in the year 2009-10. But these reserves do not include gold and foreign deposits of commercial banks held with the SBP.

Analysts said the loan will ease constraints on foreign currencies and boost confidence of overseas and domestic investors.

The IMF package means Pakistan will avert a balance of payments crisis and would be able to cover an international sovereign bond maturing in February.

However, it has been anticipated that the rupee may face pressure in the medium-term if the current account deficit was not reduced, but lower oil prices would go a long way to help economic managers achieve stabilization.

The finance ministry has projected to scale down the current account deficit to 6.5 per cent this year ending June 2009 from 8.4 per cent last year. This deficit will further decline slightly to 5.7 per cent in the year 2009-10.

But the IMF has already indicated that Pakistan’s gross external financing requirement for 2008-09 fiscal year was $13.4 billion out of which the IMF would provide $4.7 billion.

This means Pakistan would have to actively pursue its case for getting loans from developmental partners.

An official said that slight appreciation of rupee would also help the government in reducing the soaring import bill of the petroleum and food products in the months ahead.

Steep fall in prices of edible oil, petroleum products, raw material and food items in international market during the current fiscal year, ending June 30 2009, did not benefit Pakistan as rupee shed its value against the dollar to a greater extent.