Rupee slips against US dollar on IMF deal uncertainty

KARACHI: Continuing its upward trajectory against the US dollar in the interbank market for the last three sessions, the rupee on Tuesday registered a downward trend in the interbank market amid unconfirmed reports suggesting a delay in resumption of the International Monetary Fund (IMF) programme.

According to the forex dealers, the greenback gained Rs1.84 in the interbank market against rupee during intraday trading on Tuesday. The US dollar was trading at Rs206.25 against local currency at 12:25 pm.

However, in the open market, the US dollar is being sold between Rs207 to 2018.

The local unit closed at 204.56 the other day, registering an appreciation of Rs0.29 or 0.14% against the US dollar.

‘It’s on track’

Finance Minister Miftah Ismail on Monday refuted reports claiming that the International Monetary Fund’s (IMF) loan programme for Pakistan had been postponed, saying there was “no truth” to it.

“I have been reading with some amusement all the tweets and stories about IMF program being postponed or delayed due to some anti-corruption law. There is no truth to it. The IMF program is on track,” he wrote in a tweet in response to a news report about IMF programme.

I have been reading with some amusement all the tweets and stories about IMF program being postponed or delayed due to some anti-corruption law. There is no truth to it. The IMF program is on track. https://t.co/6c0MNvQ0g3

— Miftah Ismail (@MiftahIsmail) July 4, 2022

Prime Minister Shehbaz Sharif last Tuesday said that Finance Minister Miftah Ismail had informed him that Pakistan could receive $2 billion instead of $1 billion from the International Monetary Fund (IMF).

On June 28, Pakistan received the Memorandum of Economic and Financial Policies (MEFP) from the International Monetary Fund (IMF) for the seventh and eighth reviews, Finance Minister Miftah Ismail confirmed on his official Twitter handle.

“Miftah Ismail in a message said that we will hopefully be receiving $2 billion instead of $1 billion from the IMF,” the premier said and added that he told the minister that the “real goal” was achieving self-reliance.

Early this morning, the Government of Pakistan has received an MEFP from the IMF for combined 7th and 8th reviews.

— Miftah Ismail (@MiftahIsmail) June 28, 2022

“Early this morning, the Government of Pakistan has received a MEFP from the IMF for combined 7th and 8th reviews,” he wrote.

Pakistan, IMF talks

Pakistan unveiled a 9.5 trillion rupee ($47 billion) budget for 2022-23 this month aimed at tight fiscal consolidation in a bid to convince the IMF to restart much-needed bailout payments.

However, the lender later said additional measures were needed to bring Pakistan’s budget in line with the key objectives of the IMF programme.

The two sides held talks last week and agreed on the budget and fiscal measures but still need to agree on a set of monetary targets, Finance Minister Miftah Ismail said.

Pakistan had sought an increase in the size and duration of the programme when Ismail met with IMF officials in Washington in April.

Pakistan entered the IMF programme in 2019, but only half the funds have been disbursed to date as Islamabad has struggled to keep targets on track.

The last disbursement was in February and the next tranche was to follow a review in March, but the government of ousted prime minister Imran Khan introduced costly fuel price caps which threw fiscal targets and the programme off track.

Pakistan’s new government has removed the price caps, with fuel prices going up at the pump by up to 70% in a matter of three weeks.