US dollar gains 18 paisa against rupee

The Pakistan rupee remained stable but was unable to break the lossmaking sequence as it depreciated by one paisa against the US dollar on Wednesday as the country heard some positive news about economy during the last two days.

It was seventh consecutive session in which the local currency was down against the greenback which was traded for Rs224.71 in interbank trading against the previous day’s value of Rs224.70.

During the day, the rupee traded in a band of 10 paisa with a low of Rs224.60 and high of Rs224.75 while the exchange rate in open market remained between a range of Rs231.75 to Rs234.06.

The negligible decline in the rupee came a day after the International Monetary Fund (IMF) said discussions in the context of the 9th review of Pakistan’s Extended Arrangement under the Extended Fund Facility (EFF) had been productive and they were looking forward to continuing the dialogue.

“Discussions to date in the context of the 9th review have been productive,” IMF Resident Representative in Pakistan Esther Pérez Ruiz said.

“Discussions have enabled a revision to the macroeconomic outlook post floods as well as an in-depth evaluation of fiscal, monetary, exchange rate, and energy policies adopted since the completion of the combined seventh and eight reviews.”

“The IMF looks forward to continue the dialogue over policies that adequately address the humanitarian and rehabilitation needs from the floods, while also preserving fiscal and external sustainability given available financing,” she added.

On the other hand, Finance Minister Ishaq Dar said Saudi Arabia might increase the amount of oil supply to Pakistan on deferred payments to $2.4 billion a year and was likely to double deposits in Pakistan to increase foreign exchange reserves.

In an interview to a private TV channel, Dar also revealed that China had committed to rollover all deposits closer to their refund dates – the promises that can calm down markets in Pakistan.

He said, “I have discussed both things (financial help and oil facilities) with the Saudi finance minister, and there are positive vibes from there. They said they will support us.”

Pakistan’s total payments in the financial year 2022-23 stood around $21 billion and the government had already outlined a plan for paying off the country’s debts, Dar noted.

The finance minister also noted that the current account deficit was expected to decline from $7 to $8 billion when compared with the projections of $11 billion by June 30, 2023.

Saudi Arabia has already extended the term for $3 billion deposit to the State Bank of Pakistan (SBP) through Saudi Fund for Development (SFD).

Dar also said that Islamabad was looking at purchasing oil from Russia on a discounted rate and he had discussed the matter with officials from the US State Department back in October.

The US officials had told him that a G7 pricing committee was being set up for Russian oil products and that there would be a price cap, he added. “(They said) you shouldn’t buy (oil) for above that, and I agreed.”

His statement comes as the EU and G-7 have ensured imposing a $60 per barrel price cap on the Russian oil as the West tries to reduce the income sources of Moscow in response to invasion of Ukraine.

Meanwhile, Meanwhile, Pakistan’s five-year Credit Default Swap (CDS) continued to fall as it recorded a drop of 3,168 basis points to 5,882 which has also prevented the market from further chaos.

During the current financial year (FYTD), the rupee has so far lost Rs19.86 or 8.83 percent in value against the US dollar while the loss stands at Rs48.24 or 21.44 percent since January 1 (CYTD).

On the other hand, the rupee was down by 1.8 paisa against pound sterling which was traded for Rs277.65 and by Rs1.5 against the euro after it reached the value of Rs238.71.

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