KARACHI: After overnight approval of a $700 million tranche by the IMF Executive Board, the rupee on Friday strengthened further appreciating by 75 paise against the US dollar in the interbank market.

       The currency market was in high sentiments due to expected IMF approval and possible inflows from other sources. When the IMF approved the first tranche of $1.2 billion under the $3bn Stand-By Arrangement (SBA) in July 2023, the subsequent inflows from Saudi Arabia and UAE saved the country from sovereign default.

       The State Bank of Pakistan reported the closing price of the dollar at Rs280.36 from Rs281.11 a day. The local currency has been gaining against the greenback but the appreciations were negligibly small. The 75 paise increase on Friday was considered the biggest jump in a month.

       The inflow of $700m would boost the SBP forex reserves to $8.85bn, from $8.152bn in the week ended on Jan 5.

       Bankers believe that the subsequent release of the remaining $1.1bn under the SBA after the final review in March would open the door for another bailout package from the IMF while the World Bank and Asian Development Bank would follow the track.

       In the last week of December 2023, the SBP received a cumulative $787m which improved its forex holdings to $8.2bn. These inflows were reportedly provided by the WB, ADB and other multilateral lending agencies.

       The frequent depreciation of the dollar has compelled exporters not to hold their export proceeds while some currency experts believe that the PKR could reach the lowest level it achieved during FY23.

       Published in Dawn, January 13th, 2024