Rupee’s four-session appreciation run against the US dollar came to an end on Tuesday, as the currency fell 1.15% in the inter-bank market, amid unconfirmed reports suggesting a delay in resumption of the International Monetary Fund (IMF) programme.
As per the State Bank of Pakistan (SBP), the rupee closed at 206.94, a depreciation of Rs2.38 or 1.15% against the US dollar.
The development comes as investor-sentiment was hurt after reports claiming that the IMF programme has been further delayed and deadlock is over anti-corruption laws along with other financial measures of increasing gas and electricity prices.
However, Finance Minister Miftah Ismail on Monday dismissed such reports and stated that there was “no truth” to them.
“I have been reading with some amusement all the tweets and stories about IMF program being postponed or delayed due to some anti-corruption law. There is no truth to it. The IMF program is on track,” tweeted Miftah.
Talking to Business Recorder, Abdullah Umer, an analyst at Ismail Iqbal Securities Limited, said the Punjab government’s announcement to provide free electricity to households consuming up to 100 units has irked sentiment.
“The provincial government’s latest measure has raised concerns of the IMF programme getting delayed, as the Fund has asked the government to achieve a budget surplus,” said Umer.
The IMF has been adamant that it wants Pakistan to remove energy subsidies. In such a scenario, Punjab government’s announcement could upset the progress made on the IMF programme, analysts say.
Meanwhile, Umer said the currency market would remain under volatility unless the IMF programme is approved.
The story was originally published in Business Recorder on July 05, 2022.