Pakistani rupee falls sharply on IMF deal delay

KARACHI: The Pakistani rupee’s value declined sharply in the interbank trading on Thursday with the local currency falling by Rs19.98 against the US dollar, ARY News reported quoting forex dealers.

According to forex dealers, the local currency closed at Rs285.09 in the interbank market against USD.

In the open market, the greenback was being traded at Rs290, said forex dealers. The local unit closed at 266.11 in the interbank the other day.

Interbank closing #ExchangeRate for todayhttps://t.co/yixJmUnrgF pic.twitter.com/PWg8EoDAgM

— SBP (@StateBank_Pak) March 1, 2023

Analysts attributed the downtrend to the delay in signing the staff-level agreement with the International Monetary Fund (IMF), as well as the impending policy rate hike by the central bank.

IMF new conditions

The International Monetary Fund (IMF) has asked Pakistan to implement demands before reaching a staff-level agreement for the revival $7 billion Extended Fund Facility (EFF) stalled for months.

Pakistan and International Monetary Fund (IMF) are expected to make progress on the revival of the loan programme as their virtual talks for staff-level agreement would be held on March 2.

Sources further claimed that Islamabad was continuously receiving new Memorandum of Economic and Financial Policies (MEFP), while further demands were being tabled by amending the clauses of agreement.

The IMF has tabled four more conditions before reaching a staff level agreement, sources claimed, adding that the government was forced to implement surcharge of Rs3.82 on electricity permanently instead of four months.

Meanwhile, the lender also demanded to increase interest rate ahead of staff level agreement. In this regard, the State Bank of Pakistan (SBP) preponed its Monetary Policy Committee on March 2 — two weeks earlier than scheduled.

The lender insisted that the country’s interest rate should be in line with inflation – a demanded which has been agreed by the incumbent government.