KARACHI: The rupee is expected to begin a rally against the US dollar as the government’s efforts to secure the bailout program of the International Monetary Fund (IMF) has boosted positive market sentiment and Because of the increased supply of dollars, JEE News reported on Sunday. traders and analysts.
The government appears serious about taking some preliminary steps that could help meet the IMF’s conditions for sealing a state-level deal with the global lender.
During the outgoing week, the local currency gained about 2.18 percent against the greenback in the interbank market, rising to 269.28 on Friday from 275.30 on Monday.
Although no agreement was reached between Islamabad and the IMF during the fund’s 10-day visit to unlock the funds from the $6.5 billion bailout, both sides agreed to continue long-term talks as the South Asian country continues to deteriorate. There is no immediate solution to the economic crisis. .
Pakistan should negotiate with the IMF for more money to receive more aid, avoid default, and rebuild foreign currency reserves that have dwindled to $2.9 billion.
The stock market started to sell off, but there was no reaction to the failure of the two sides to reach a staff-level agreement. This adds at least another 10-12 days to the IMF’s time frame and the rate at which reserves are dwindling is a serious concern.
Despite the setback, the market is optimistic that the IMF deal will go ahead, especially given the several tough “first steps” Pakistan has already taken.
“As the IMF needs to see some progress on the terms, the Staff Level Agreement (SLA) is still not in place. In about a week, the SLA could be signed and then put up for final approval. may be referred to the IMF board. Overall, the progress is good,” said a currency dealer.
According to Trasmark’s client note, there could be a positive impact due to the dual movement in the currency market by exporters, who are capturing export earnings, and providing much-needed liquidity to the market. Is.
“For the first time in months, the market also witnessed material selling in forward tenor by exporters. The last quote in the gray market was 280/282 and there is some panic as well as speculators looking to sell their profits. And want to exit the market.
There was still a substantial backlog of imports and payments, which would exceed any flow of export earnings. But in the medium term, and given that the IMF agreement will move forward with the follow-up of friendly countries and multilateral institutions, demand could be hit hard.
“Additionally, export trades will witness a boom while import trades will witness a collapse. In the short term the market may stay above the 270/$ level, but in the medium term back to 262. /$ could fall to levels,” the client note said.
