KARACHI: The US dollar fell to 220.12 Pakistani rupees (PKR) on Tuesday after the International Monetary Fund (IMF) approved the transfer of $1.1 billion to the country under the Extended Financing Facility (EFF) .
The rupee recovered Rs1.80 to end at Rs220.12 against the dollar from the previous day’s close of Rs221.92 on the interbank foreign exchange market.
READ MORE: Dollar strengthens to PKR 221.92 amid political uncertainty
The IMF Executive Board has completed its seventh and eighth reviews for Pakistan under the Extended Financing Facility (EFF), which is expected to release a tranche of $1.1 billion.
This will bring the total IMF disbursement under the EFF program to Pakistan to $3.9 billion and help support the country’s foreign exchange reserves.
In addition, to support program implementation and meet higher financing needs in FY23 as well as catalyze additional financing, the IMF Executive Board approved an extension of the EFF until in June 2023 instead of September 2022. The board also approved increased access through the DTS. 720 million ($1 billion) bringing total access to $6.5 billion.
READ MORE: Dollar climbs to PKR 220.66 ahead of IMF board meeting
The rupee fell to an all-time low of Rs 239.94 against the dollar on July 28, 2022.
The currency market has seen a continuous depreciation in the value of the rupee since the government lifted the import ban on luxury and non-essential items. In addition, international oil prices are also experiencing an upward trend.
On August 20, 2022, the government lifted the import ban on luxury and non-essential items. The government on May 19, 2022 imposed this ban following a massive depreciation in the value of the rupee and a significant depletion of foreign exchange reserves.
The rupee has seen a steady decline against the dollar since the government lifted the ban. The local currency depreciated continuously during the week (August 22 to August 26) and fell by 6.01 rupees or 2.8% over the period.
READ MORE: Pakistani Rupee Drops for 4th Day; the dollar climbs to Rs219.14
Currency experts said the vertical drop in foreign exchange reserves has also put pressure on the value of the rupee.
Pakistan’s foreign exchange reserves fell by $91 million to $13.522 billion in the week ending August 19, 2022. The country’s foreign exchange reserves were $13.613 billion a week ago, c i.e. August 12, 2022.
The country’s foreign exchange reserves reached a record high of $27.228 billion on August 27, 2021. Since then, foreign exchange reserves have declined by $13.703 billion.
READ MORE: Dollar gains for third day, ends at 218.38 PKR
The State Bank’s official foreign exchange reserves declined by $87 million to $7.81 billion in the week ending August 19, 2022, from $7.897 billion a week ago.
Foreign exchange reserves held by the central bank hit a record high of $20.146 billion during the week ending August 27, 2021. Since then, official SBP reserves have declined by $12.336 billion.
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