IMF Agreement Helps Rupee Gain Rs10 Against US Dollar

IMF Agreement Helps Rupee Gain Rs10 Against US Dollar
The Pakistani rupee made a recovery of Rs10.55 in the interbank market on Tuesday.

The State Bank of Pakistan (SBP) on Tuesday said that during the first trading session of the new financial year, the rupee had improved by 3.83% to a value of Rs275.44 in the interbank.

This was up by Rs10.55 from the level of Rs285.99, where the market had closed prior to the Eidul Azha holidays.

Earlier, during intraday trading in the interbank, the rupee had gained as much as Rs15 before its gains slowed prior to the close of trading.

The improvement in the value of the rupee comes on the back of two reports. The first is the staff-level agreement between Islamabad and the International Monetary Fund (IMF) for a nine-month-long standby agreement, during which period the global lender will give Pakistan $3 billion.

The agreement was possible after Pakistan agreed to the terms of the arrangement, whereby it would allow the market forces to determine the value of the dollar rather than artificially alter it.

Moreover, Pakistan has agreed to open imports and raise tariffs.

The other report was that of Pakistan's foreign exchange reserves which received a modest boost of $477 million in the third week of June to push the flagging reserves above the $9 billion mark.

Of the $9.341 billion in Pakistani holdings, around $4.07 billion are held by the State Bank, while some $5.271 billion are held by commercial banks.

In the second week of June, Pakistan held a total of $8.864 billion in foreign currency. Of this, the state bank held only $3.537 billion, while commercial banks held $5.327 billion.

Compared to May, when total reserves were at $8.528 billion, the country has gained around $813 million.