KARACHI: The rupee is expected to stay stable next week, owing to the inflows from the International Monetary Fund (IMF); however, the recent numbers of the current account deficit may escalate the demand for the dollars.
The IMF has announced a $650 billion financial package to boost the global economy. Pakistan is scheduled to get $2.77 billion on August 23, 2021 under this package.
The State Bank of Pakistan (SBP) will directly receive this assistance.
Currency experts expressed the hope that the IMF’s loan amount would ease pressure on the exchange rate. They also said that the declining global commodity and oil prices will also help the local currency make gains.
Analysts at Arif Habib Limited said crashing global commodity prices would ease pressure on the demand for import payments.
Further, a decline in infection ratio of the novel coronavirus in Pakistan and slowdown in the global oil prices would release pressure from the external account.
Pakistan’s exports exhibited a 16.44 per cent growth in July 2021 to $2.33 billion, compared with $2 billion in the same month of the last year.
Meanwhile, the workers’ remittances also maintained a strong trend in July 2021, as the SBP received $2.71 billion for the month. The central bank said the workers’ remittances continued their trend, remaining above $2 billion for the 14th consecutive month. Further, this is the second highest-ever level of remittances reported in July.
However, the external payment has offset the positive outlook of the inflow side. The trade deficit for the month widened over 85 per cent to $3.1 billion in July 2021, compared with the deficit of $1.67 billion in the same month of the last year.
The higher deficit is mainly because of a sharp increase of 48 per cent in the import bill. The import bill increased to $5.43 billion in July 2021, compared with $3.67 billion in the same month of the last year.
The current account deficit has been recorded at $773 million in July 2021. According to the SBP, the current account posted a surplus of $583 million in the same month of the last year.
The rupee, during the outgoing week, fell to $164.18 against the dollar. The local currency is at a 10-month low against the greenback. The local currency hit an all-time low of Rs168.43 on August 26, 2020.
Meanwhile, businessmen have raised voice time and again against the rupee instability, saying the industrial expansion and economic growth is not possible without stability in the value of the local currency, as the dollar has been appreciating against the rupee for the last more than 10 months because of the higher current account deficit and burgeoning import bills.