Pakistan’s rupee rises after two weeks of battering

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A currency dealer counts Pakistani rupees and US dollars at his shop in Karachi.File/ Reuters

Pakistan’s rupee on Friday rose by 0.24%, or 57 paisa, to close at 239.37 after a two-week losing streak against the US dollar, central bank data showed on Friday.

During the week the rupee depreciated around 5% and last week lost around 8% of its value against the dollar, taking its losses for the year to more than 25%, according to central bank data.

It stood at 228.37 rupees to the dollar when trading opened on Monday, its first trading day of the week.

The currency’s loss of value against the dollar has deepened an already difficult economic crisis, as Pakistan struggles with a depleting foreign currency reserve and a current account deficit.

“There are some political positives that could have helped a slight recovery in the rupee, but mainly it is the payment pressure vs inflows. If there is a mismatch tomorrow, there could be further devaluation,” said Fahad Rauf, head of research at Ismail Iqbal Securities.

On Thursday, Pakistan’s foreign exchange reserves fell $754 million to $8.57 billion, marking another sharp drop in the country’s fast depleting funds, which cover less than two months’ imports.

Pakistan posted record monthly highs for imports and petroleum-related purchases in June. Its current account deficit for the financial year that ended June 30 was $17.4 billion – more than quintuple the $2.8 billion posted in the last financial year, 2020-21.

Three ratings agencies, Moody’s Fitch, and S&P, have revised Pakistan’s outlook to negative from stable – all citing external financing pressures.

“The negative outlook reflects growing risks to Pakistan’s external liquidity position over the next 12 months amid an increasingly difficult economic landscape,” S&P said in a statement on Thursday – the latest agency to revise its outlook.

IMF has reached a staff-level agreement with Pakistan that would pave the way for the disbursement of $1.17 billion. However, approval by the IMF board is still awaited.

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