Rupee soars after relaunch of IMF loan program in Pakistan

A file image shows a currency dealer counting $100 notes while 5,000 rupee notes are placed on the table next to him. — AFP/File

KARACHI: The Pakistani rupee finally broke its downward trend and saw a strong recovery in interbank trade as the International Monetary Fund (IMF) Board approved the relaunch of the Expanded Financing Facility (EFF) program ) from Pakistan a day earlier.

The local currency was under pressure and continuously maintained a losing streak since August 22.

The rupiah rose 2.92 to 219.50 against the US dollar during intraday trading in the interbank market, down from Monday’s close at 221.92.

After months of strenuous efforts by the Shahbaz-led government, the global lender has approved the seventh and eighth reviews of the stalled $6 billion program in Pakistan, government officials said late Monday.

In a statement, the Fund announced that the Board had completed the combined seventh and eighth reviews of the “expanded arrangement” under the Expanded Financing Facility (EFF) for Pakistan.

“The Board’s decision allows for an immediate disbursement of SDR 894 million (about $1.1 billion), bringing total purchases for budget support under the arrangement to about $3.9 billion. dollars,” the statement said.

The global lender also approved the increase in the loan amount and extended it until June 2023.

The Secretary General of the Association of Exchange Companies of Pakistan (ECAP), Zafar Paracha, said that he expects the local unit to continue to appreciate and fall to 200 in the coming days.

Parsha pointed out that when the deal materialized after a long delay, the government took fiscal tightening measures which led to an increase in smuggling.

Apart from the smuggling of dollars to Afghanistan, Parasha said that the heavy regulatory taxes imposed on imports have led to an increase in the smuggling of goods, which has led to a shortage of dollars.

He noted that although the amount of the global lender stands at $1.1 billion, this will pave the way for Pakistan to secure additional funds from other multilateral and bilateral organizations.

Parsha said foreign direct investment will also increase and expects the overall economy to see a boost in the coming days.

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