KARACHI: After staging an IMF-induced spectacular rally of 3.8 per cent overnight, the rupee lost steam and depreciated by Rs2.56 against the US dollar in the interbank market on Wednesday.

On Tuesday, the first trading day after the long Eidul Azha holidays, the local currency appreciated by Rs10.55 against the greenback amid optimism that the government reached a staff-level agreement for $3 billion stand-by arrangement with the IMF.

The agreement is yet to be approved by the Executive Board of the IMF scheduled to meet on July 12.

However, currency analysts were sure that speculative elements have entered the market to benefit from the short-lived sentiments.

The State Bank of Pakistan reported the dollar’s weighted average closing price at Rs277.41 compared to Rs275.44 on Tuesday, an appreciation of Rs1.97. However, the bankers said the dollar rose by Rs2.56 to Rs278.

The SBP governor in an interview with a state-run TV channel said the IMF agreement will bring economic stability and boost export and remittances.

Many analysts doubt that the prevailing positive sentiments will last for a longer period since the foreign exchange reserves position is still precarious while the debt servicing requires $25bn in FY24.

The open market remained calm with a slight increase in dollar price. The dollar was traded at Rs281 compared to Rs280 a day earlier. The trading was thin and the sentiments in the open market were a mere reflection of interbank rates.

Published in Dawn, July 6th, 2023