Due to Pakistan’s ability to secure $500 million from the Industrial and Commercial Bank of China (ICBC) and the likelihood of reaching an agreement with the International Monetary Fund, the rupee strengthened further versus the US dollar (IMF).
In intraday activity on the interbank market, the rupee appreciated by Rs3.46 against the dollar. About 11:47 p.m., 275 were spotted being exchanged by the neighborhood unit.
On Friday, the rupee significantly strengthened against the US dollar to end the week. It increased by Rs6.63, or 2.38%, and closed at 278.46, according to the State Bank of Pakistan (SBP).
The hype was created by the nation’s financial institutions and international players who manipulated and caused the rates to increase, according to Zafar Paracha, general secretary of the Exchange Companies Association of Pakistan (ECAP), who listed a few reasons for the earlier dollar appreciation.
“Due to a market correction, the dollar is currently weaker against the rupee and is continually fluctuating. Financial credentials cannot be changed in one day which can cause the currency to depreciate or appreciate at such a scale,” said Paracha.
According to him, Pakistan’s destabilised currency harms its reputation and discourages both foreign direct investment (FDI) and domestic investors.
He believed that the dollar should remain in the range of 260 to 265 in light of the IMF accord and the inflows from friendly nations.
In addition, Paracha said that, for the first time ever, the political climate in Pakistan has an effect on the dollar exchange rates. He pointed out that because we are currently on the very weaker side, the IMF is also pressing us.
Previously IMF reopened discussion with Pakistan but left Islamabad with promise that the talks would continue.
He also emphasised that the financial situation is not as dire as is being reported. He added that Pakistan needs $10 to $15 billion, but that flow has been stopped. Our inflow and outflow are $50 billion and $60 billion, respectively.
“It would make a huge impact if we had managed it well, reducing our expenditures and the subsidies of $17.4 billion which the government gives to our elites,” he insisted.
Not the tax rate, but our tax base must be expanded urgently. The salaried elite and large corporations are the only ones who pay the tax. He came to the conclusion that the government must broaden its tax base.
An official from the government voiced optimism earlier today that an agreement might be reached with the Washington-based lender.
Another official stated that Pakistan anticipated reaching a staff-level agreement (SLA) with the IMF in the next days, but the Fund was hesitant to provide a timeline for doing so.