Rupee gains in interbank market

On Wednesday, the Pakistani rupee appreciated against the US dollar in the interbank market following statements made by Finance Minister Ishaq Dar. Despite a delay in the IMF bailout programme, Dar reassured investors that Pakistan would not default. The local currency appreciated by 0.49% or 1.39 rupees, ending the day at 285.74 against the dollar in the interbank market. However, in the open market, the domestic currency remained at the previous day’s closing rate of 309 per dollar.

According to dealers, the rupee had been under pressure for the last two days, but investor fears were put at ease by Dar’s comments, which stated that the nation was not on the brink of a financial crisis and would not default. Despite regular import payments, there was no decrease in importer demand for dollars; however, market sentiment changed on the back of the minister’s remark and the Pakistani currency appreciated.

The IMF programme is likely to end on June 30 without resuming due to timing issues. Coalition government delays resulted in the programme reviews not being completed in a timely manner. Although Pakistan has completed all prior actions, the ninth review of the IMF programme was unable to be completed. Earlier this month, the IMF stated that Pakistan needs to bridge a significant financing gap before achieving a staff-level agreement. Investors now anticipate that the government will present a backup plan in the event that the IMF programme is not resumed.

Reports indicate that Pakistan expects China to roll over more than $2 billion in debt due next month. The country has foreign debt due in May and June worth around $3.7 billion.