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Rupee rally continues unabated over improved dollar supply

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  • Rupee settles at 262.82 against dollar in interbank market.
  • Adequate supply of dollar improves investors’ sentiment.
  • Local unit closes day at 268 in open market.

Amid optimism regarding the revival of the International Monetary Fund (IMF) programme in the coming days and an improved supply of the greenback in the markets, the Pakistan rupee continued to register gains for the fourth consecutive session.

The local unit closed the day at 262.82 against the US dollar after gaining Rs1.56, or 0.59%, in the interbank market compared to Thursday’s close of 264.38. Meanwhile, the rupee value remained unchanged at 268 in the open market.

Currency dealers attribute this recovery to an improved supply of greenback as exporters are selling their dollar holdings to take advantage of better rates while an increase in remittance inflows is also observed.

The government has undertaken the necessary steps to secure the stalled IMF programme. It has depreciated the currency, increased the cost of gas and electricity, and ultimately unveiled a mini-budget, imposing new taxation measures in an effort to raise an additional Rs170 billion during the ongoing fiscal year 2022-23.

The government appears to be prepared for a staff-level agreement with the IMF since all known prerequisites for the Washington-based lender have been met.

The centre is trying to get the IMF on board in the next day or two as depleting reserves and upcoming repayments on external fronts have pushed the government into the corner. Inflows from the IMF will unlock flows from friendly countries and other multilateral institutions.

Moreover, foreign exchange reserves held by the State Bank of Pakistan (SBP) also rose over $200 million during the week ended February 10 after a hiatus of three weeks.

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The KSE-100 Index rises following a sharp decline in the previous session.

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The government is considering filing a treason case under Article 6 against PTI founder Imran Khan, former president Arif Alvi, and former deputy speaker Qasim Suri. On Tuesday, the KSE-100 Index was up more than 1.3% during early trading, following a day of roughly a 2 percent loss due to growing political unrest and the potential banning of the party.

However, the benchmark index of the Pakistan Stock Exchange was trading at 79,074.63 by 11:49 a.m., having gained 535.45 points, or 0.68 percent, after reaching an intraday high of 79,578.04.

Market analysts said that political tensions were the primary cause of the KSE-100’s earlier Monday decline of 1578.71 points, or 1.97 percent.

They did point out, though, that a correction was a reasonable reaction to the protracted upswing that allowed the benchmark mark index to reach 81,839.86 on July 18.

As a result of interest rate cuts and the possibility of another IMF program, the Pakistan Stock Exchange has gained 22.97 percent so far this year. The cycle began on June 10 with a 1.5 percent decrease in borrowing costs.

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In interbank trade, the US dollar crushes the Pakistani rupee.

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During interbank trade on Tuesday, the US dollar’s value increased by 15 paisas, reaching Rs 278.45.

It is important to remember that Fitch Business Monitor International expressed concern about the possibility that Pakistan’s economic stability may be jeopardized by the ongoing political unrest.

The fragile situation of Pakistan’s economic recovery was emphasized by Fitch in its most recent Pakistan Country Risk Report, which also noted that economic activity has been impeded by urban protests.

(PTI),In spite of multiple successful judicial appeals, the founder of Pakistan Tehreek-e-Insaaf (PTI) is expected to stay behind bars, the article notes, underscoring the fragile political environment.

With no urgent plans for new elections, this scenario suggests that the coalition administration will remain in office for the next 18 months.

Fitch also described an eventuality in which the government could change and be replaced by a technocratic administration. This suggests that the government of Pakistan would carry out the reforms demanded by the IMF, contributing to the 3.2% GDP growth expected in 2024–2025.

The policy rate has stabilized above projections, while the research predicted it may reach 16 percent this fiscal year and 14 percent the following year.

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Pakistan’s gold prices per kilogram dropped.

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When 24-karat gold dropped by Rs. 500 to Rs. 250,500 per tola on Tuesday, the price of gold fell once again on both the local and international gold markets.

By Rs429 to Rs214,763, 10 grams of gold cost less, according to the Gold Sellers Association.

Gold’s price per ounce dropped to $2391 on the international market by $11.

At Rs2920 per tola, the price of silver did not change.

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