On Tuesday, when the International Monetary Fund’s (IMF) executive board renewed Islamabad’s long-awaited rescue program, the Pakistani rupee appreciated versus the US dollar during intraday trade.
During Tuesday’s interbank trading, the value of the rupee rose from Monday’s closing price of 221.92 to a high of 220.
Officials said late on Monday that the global money lender has accepted the seventh and eighth evaluations of the stalled $6 billion Pakistan program, capping off months of intensive negotiations.
The Fund said in a statement that the executive board has concluded the seventh and eighth evaluations of Pakistan’s “extended arrangement” under the EFF.
Following the board’s resolution, SDR 894 million (about $1.1 billion) can be disbursed immediately, increasing total purchases for budget support under the arrangement to almost US$3.9 billion.
The loan was increased by the international financial institution and the repayment period was extended to June of 2023.
In an interview with Geo. tv, Zafar Paracha, general secretary of the Exchange Companies Association of Pakistan (ECAP), predicted that the local unit would continue appreciating and drop to 200 in the next days.
Paracha emphasized that as the agreement was finally reached after a protracted delay, the administration enacted steps for fiscal restraint, which in turn increased smuggling.
Paracha claimed that the shortage of dollars was caused by both the smuggling of dollars into Afghanistan and the smuggling of commodities as a result of the high regulatory taxes put on imports.
He pointed out that while the total from the international financial institution was only $1.1 billion, it would open the door for Pakistan to receive even more money from multilateral and bilateral organizations.
Additionally, Paracha predicted that FDI would rise and the economy as a whole will improve in the near future.