KARACHI: The rupee appreciated slightly against the US dollar on Tuesday following the approval of a $1.1 billion tranche from the International Monetary Fund (IMF).

Stakeholders in the economy and currency dealers had anticipated the rupee to rebound strongly against the greenback with the revival of IMF loan programme.

On Tuesday, the State Bank of Pakistan (SBP) reported the closing price of the dollar at Rs220.12 in the interbank market while independent sources said the actual price for the greenback was Rs221. The dollar lost Rs1.80 against the rupee.

However, currency dealers in banks revealed that the SBP was against a sharp depreciation of the dollar in one-go as exporters were allowed to market their holdings.

“The dollar could see a steep cut of up to four or five rupees with the resumption of the IMF loan, but the SBP, which manages the exchange rate with verbal instructions, did not allow the market to see a sudden devaluation of the dollar,” said Atif Ahmed, a currency dealer in the banks. He added that this was done to support the exporters get benefits and off-load their dollar holdings.

Some currency analysts said the dollar would not fall to the pre-regime change levels in April. The reason for this assumption was the flood-related devastation which caused massive loss of crops, livestock, bridges, and roads, and the displacement of 30 million people. They said the resettlement requires massive investment, while exports would suffer due to the loss of crops, and a higher cost of doing business due to high inflation and the global recession.

The Exchange Companies Association of Pakistan (ECAP) reported the dollar was traded at a price of Rs222 on Tuesday while it was pegged at Rs230 on Monday – a decline of Rs8 per dollar.

The open market has been facing a severe shortage of foreign currencies as it seeks to increase its dollar holdings.

Published in Dawn, August 31st, 2022