Expectations of a new IMF deal are likely to keep the rupee stable.

In Karachi, reports suggest that the rupee is expected to maintain stability in the coming months, largely attributed to the anticipation of a new agreement with the International Monetary Fund (IMF) for another bailout program, anticipated to materialize by June. Currently trading at 278 against the dollar, the local currency is projected to hold steady within the range of 290 to 301 against the greenback.

According to a poll conducted by Topline Research, which gathers insights from various market participants on macroeconomic and market variables, there’s a more optimistic outlook for the stock market compared to previous months. The brokerage firm emphasizes that a significant depreciation of the rupee isn’t foreseen. About 49% of respondents in the poll anticipate the rupee to stay within the 290 to 310 range against the dollar by the end of the year, contrasting with 38% who held this view three months ago regarding the rupee-dollar parity by June 2024.

Contrary to December 2023, when only 2% of respondents expected the local currency to remain within the same range by June this year, now 23% believe the rupee might trade between 250 to 270 against the greenback.

Although formal discussions on the new IMF deal haven’t commenced yet, Finance Minister Muhammad Aurangzeb anticipates reaching a staff-level agreement with the IMF for a new bailout package by the fiscal year’s end. Details of the agreement are expected to be discussed during the spring meetings.

Aurangzeb revealed plans to lead a Pakistani delegation to the US capital around mid-April, stating that the IMF has shown receptiveness towards a “larger and longer program.” Additionally, he mentioned the likelihood of receiving a new tranche of loan from the IMF soon, emphasizing the necessity of another program.

While a staff-level agreement was reached between Islamabad and the IMF last week, the Fund’s executive board is yet to fix a date for considering the completion of the second review and release of the third tranche of $1.1 billion. Approval for disbursement is anticipated by the end of April, as per reports.

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