By Staff Reporter
KARACHI: The rupee surged 5.2 percent against the dollar on Tuesday, after the country clinched a $3 billion loan deal with the International Monetary Fund (IMF) over the weekend to shore up its foreign exchange reserves and repay its debts.
The rupee was quoted at 271 per dollar at 0500 GMT, up from Thursday’s close of 285.99, as investors welcomed the IMF’s approval of a stand-by arrangement (SBA) that will provide a balance of payments support for Pakistan.
“The SBA was the main trigger for the dollar’s decline in the domestic market,” said Khurram Schehzad, CEO of Alpha Beta Core, a financial advisory firm.
Schehzad expects the rupee to gain further as reserves increased and remittances rose through official channels.
Waqas Kukaswadia, deputy head of research at JS Global, said the market was upbeat about the government’s agreement with the IMF. “The open market also saw ample supply of greenback as market players who had hoarded dollars started to sell them.”
Currency dealers said exporters were also bringing in their proceeds to the market, boosting supply.
Malik Bostan, president of the Forex Association of Pakistan, said the rupee could strengthen more after the IMF’s executive board ratified the deal in the coming days, but warned that any delay or deadlock in talks could create panic again.
The rupee has depreciated about 20 percent since January, as Pakistan faced a balance of payments crisis due to low reserves, a large current account deficit and weak exports.
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