KARACHI: After a big drop of 6.6 per cent last week, the rupee recovered to 278 to a dollar on Monday but the slow pace of recovery was discouraging for stakeholders as they had seen the dollar below the Rs260 mark just a few days ago.

According to the State Bank, the dollar closed at Rs 277.92 in the inter-bank market on Monday while it had closed at Rs278.46 on March 3. The rupee appreciated by 54 paisa.

The sudden fall of Rs25 per dollar in two days last week shocked the market as there was no change in the government or State Bank’s policy while the opening of letters of credit (LCs) was kept tightly closed.

Currency dealers attributed the sudden increase to the State Bank’s move to buy dollars in big numbers. Banks cashed in on the buying spree and made windfall profits, pushing up prices steeply.

“The current situation is not favourable for the rupee, particularly after reports that IMF is insisting Pakistan must ensure $7bn for current account deficit till the end of FY23 before it releases a much-awaited instalment of $1.1bn,” said a senior banker familiar with the currency market.

However, market experts were not hopeful that Pakistan could meet the target given by the IMF for release of the tranche.

“The prime minister is in Qatar. Inflows are likely for the time being to meet the $7bn IMF condition,” said a currency dealer.

Published in Dawn, March 7th, 2023