Pakistani rupee may recover more value ahead of IMF's baord meeting

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The Pakistani rupee is expected to recover more grounds against the US dollar this week due to subdued demand from importers, experts say.

Analysts and market insiders said the South Asian nation’s currency is likely to remain stable against the greenback and other major currencies. It will take cue from the central bank's monetary policy meeting on Monday.

Forex dealers and market experts will also optimistic about the approval of the International Monetary Fund’s (IMF) $1.12 loan tranche disbursement later this month. The IMF executive board will meet on August 29 to discuss and approve the revival of $6 billion extended fund facility for Pakistan.

The rupee, which recovered 10.33 per cent of its value against the US dollar in August so far, is expected to register more gains to conclude the month on positive note after a significant decline in July. It fell 0.31 per cent against the dollar during the week and closed at 214.65 in the interbank market on Friday.

Samiullah Tariq, head of research at Pakistan Kuwait Investment, said the rupee is expected to sustain an upward trend ahead of the IMF executive board’s meeting next week.

“I think the rupee should be stable around 210-215 to a dollar amid hopes of receiving the $1.17 loan disbursement by month-end. The government is also expected to allow opening and retirement of LCs to smoothen supply chain,” Tariq told Khaleej Times.

“The currency will register more gains as it depreciated excessively last month,” he added.

Analysts said that the central bank is expected to maintain policy rates at the current level of 15 per cent for the next seven weeks. However, the commercial banks expect that the interest rates may go up by 100 basis points to contain inflation, which hit a record high of 42 per cent in the week ended on Friday.

“The State Bank of Pakistan may hike rates in line with the other central banks worldwide as the benchmark consumer price index also rose to a 14-year high at around 25 per cent in July,” according to a banker.