The markets are buoyant on the news of a mending of fences with the IMF and a narrowing of trade deficit.
By Staff Reporter
ISLAMABAD: Pakistani currency and stocks continued to rally Wednesday on a positive sentiment following back-to-back news that the country is on track to qualify for the revival of a stalled International Monetary Fund (IMF) bailout.
The local currency gained 1.38 rupees against the greenback in early trade on Wednesday. The benchmark KSE-100 index gained 522 points in intraday trade and is currently trading at 40,714 points.
The rupee’s rally began after Finance Minister Miftah Ismail announced Pakistan had executed all requisite prior actions to qualify for the revival of a stalled bailout program. The last of these was the increase in pump prices that went into effect on August 1.
The IMF followed up with a statement in confirmation of Ismail’s assertion. “With the increase in PDL on July 31, the last prior action for the combined 7th and 8th review has been met”, IMF country representative Esther Perez Ruiz said in the statement.
“The Board meeting is tentatively planned for late August once adequate financing assurances are confirmed.”
Flanked by the central bank chief, the Finance Minister had also asserted rupee’s strong fundamentals, and the authorities’ readiness to support the local currency if need be.
Another reason for the rupee’s buoyancy could be encouraging trade numbers released by the Pakistan Bureau of Statistics (PBS).
Pakistan’s merchandise trade deficit for the month of July 2022 clocked in at USD 2.64 billion compared to a deficit of USD 4.96 billion in the preceding month.
This narrowing of trade deficit by 46.77 percent MoM, helped by a decline in imports by 38 percent MoM, has helped ease pressure on the rupee.
Meanwhile, the KSE-100 index gained 72 points from fertiliser, 45.71 points from chemicals, and 45.71 points from cement (37.03 points). The all-share index volume nearly quadrupled from Monday’s 110.42m to 217.5m. Similarly, the value of shares traded jumped from Rs3.72b to Rs6.33b in the preceding session.
An IMF mission led by Nathan Porter reached a staff-level agreement (SLA) with the Pakistani authorities on July 13, 2022 for the conclusion of the combined seventh and eighth reviews of the Extended Fund Facility (EFF) program. The deal is to be placed for the IMF executive board’s approval at its next meeting.
Pakistan expects an inflow of USD 1.17 billion after the approval of IMF’s Executive Board, bringing total disbursements under the program to about USD 4.2 billion.
On Wednesday, the rupee recovered for the third consecutive session after weeks of persistent declines in its value.
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