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The PKR showed a strong recovery against the dollar in the interbank market on Tuesday, gaining Rs2.92 by 9:54am.
According to the Forex Association of Pakistan (FAP), the local currency was being traded at Rs219 per dollar around that time after appreciating 1.31 per cent.
The rupee’s recovery comes after the International Monetary Fund’s (IMF) Executive Board completed the combined 7th and 8th reviews of a loan facility for Pakistan, allowing immediate disbursement of $1.1 billion to the country, said an official IMF announcement.
Head of Research at Tresmark, Komal Mansoor, termed the rupee’s recovery a “minor correction” since the release of the loan tranche had “largely been factored in after the staff-level agreement”.
“The market should be cautious as food inflation will spike given supply chain constraints and interest rates are likely to rise,” the analyst said.
Meanwhile, FAP Chairman Malik Bostan said the rupee’s value rose “significantly” on expectations that the loan tranche from the IMF and inflows from friendly countries would be received soon.
This would stabilise the foreign reserves and the exchange rate, he added.
Mettis Global Director Saad bin Naseer also attributed the rupee’s recovery to the IMF’s approval of the loan disbursement. He said the rupee’s value would stabilise in the coming days as countries and overseas Pakistanis donate money for flood-relief efforts, and remittances are received.
The rupee had fallen to a record low of 239.94 on July 28. It had then recovered for 11 consecutive sessions, closing at Rs213.90 in the interbank on Aug 16.
It had started falling again from Aug 17, losing Rs8.02 till yesterday (Aug 29).
