Pakistan’s currency maintained its uptrend for the second consecutive working day on Monday, gaining 0.19%, or Rs0.54, to Rs277.92 against the US dollar in the inter-bank market.
The currency had closed at Rs278.46 against the greenback on Friday, according to the State Bank of Pakistan’s (SBP) data.
In the open market, the currency gained Rs3.50 and reached Rs279 against the greenback, according to the Exchange Companies Association of Pakistan (ECAP).
The latest recovery came after Pakistan received a loan of $500 million from China on Friday. It was the first of three tranches of a loan totaling $1.3 billion.
Finance Minister Ishaq Dar announced that the receipt of $1.3 billion would improve Pakistan’s foreign currency reserves, which would prop up the rupee. With the inflow of $500 milion, the foreign exchange reserves are expected to have improved to over $4 billion compared to the earlier $3.8 billion. In the prior week, Beijing had lent $700 million.
On Friday last week, the rupee made a surprising recovery of 2.38%, or Rs6.63, to Rs278.46/$ compared to an all-time low of Rs285.09 hit on Thursday.
Experts linked partial recovery of the rupee with an aggressive increase in lending rate by 300 basis points by the central bank.
The surge in lending rate to an all-time high of 20% made bank financing expensive, increased cost of doing business and kept demand for both imports and US dollars sluggish.
Market talk suggests that the rupee may continue to consolidate around current levels in the short run ahead of the revival of International Monetary Fund’s (IMF) loan programme this week.
The IMF has, however, sought assurances from Pakistan that friendly countries would also provide financing to boost the country’s foreign exchange reserves.
