PKR rises Re1 against the dollar after $1.5bn ADB loan accord

The Pakistani rupee (PKR) gained over Re1 against the US dollar during morning trade in the interbank market on Tuesday.

According to rates issued by the Forex Association of Pakistan, the local currency was changing hands at Rs219.30 per dollar at 1pm, an appreciation of Rs1.11 or 0.5 per cent over yesterday’s close of Rs220.41.

Analysts attributed this change to expected inflows of $1.5 billion after Pakistan signed a loan agreement with the ADB for budgetary support and help in flood-related rehabilitation and reconstruction activities.

Saad Bin Naseer, director at Mettis Global, a web-based financial portal, said the signing of the ADB agreement coupled with the expectation of debt rescheduling from China could help the rupee continue this momentum in the days to come.

Finance Minister Ishaq Dar, who is currently in the US for talks with the International Monetary Fund (IMF) and World Bank, is expected to visit China soon to hold negotiations on Pakistan’s bilateral debt restructuring.

Naseer said during the minister’s trip, agreements on new projects with China were also expected, developments that could bode well for the rupee.

Zafar Peracha, general secretary of the Exchange Commission of Pakistan (Ecap), said in addition to the ADB loan accord, the country’s import bill had also fallen, which translates into a narrower current account deficit. In the coming months, he said, “friendly countries” are expected to release $4 billion in funds, which would strengthen the rupee further.

He said the finance minister is also scheduled to visit France soon, a trip that could bring more “good news” for Pakistan and help bolster the rupee further.

The currency dealer said recent pressure on the rupee had come on the back of high import payments but expressed hope that these positive developments could push the greenback down to Rs200 in the coming months.