KARACHI: The rupee stayed firm against the US dollar for the second day in a row, gaining 23 paise in the interbank market on Friday.

Currency experts, however, said the PKR appreciation was a short-term phenomenon because the economic fundamentals were weak and the greenback would dominate again on strong demand, especially from importers.

The State Bank of Pakistan reported the dollar settled at Rs286.97 against Rs287.20 a day before. On Thursday, it appreciated by Rs2.18 from Rs289.38 a day earlier.

The SBP foreign exchange reserves, which provide strength to the exchange rate, saw a decline of $32m to $8.154bn during the week ended on July 27.

In July, the dollar appreciated by 3 per cent despite an inflow of about $4.2bn from multiple sources.

Pakistan needs $25bn to meet external debt repayment obligations in FY24. It seems the country would need another programme even after the completion of the 9-month $3bn Stand-By Arrangement.

However, it seems the declining exports in July could create a problem particularly if the remittances also show a contraction as they did in the previous fiscal year. In such a situation, it would be tough for the next government after general elections to meet the targets set by the IMF to remain eligible for future loans. Pakistan also relies on China for the rollover of its debts.

The open market currency dealers reported the dollar price at Rs292 from Rs292.50 on Thursday. The price gap in the interbank and open two markets was 1.75pc on Friday, higher than the 1.5pc limit set by the IMF.

Published in Dawn, Aug 5th, 2023