Rupee stable, potential growth volatility next FY.
Pakistan’s agreement with the IMF for the final review of a $3 billion Stand-By Arrangement is expected to keep the rupee stable until June. Currently, it’s trading at 278 against the dollar. However, analysts foresee pressure on the rupee in the next fiscal year due to the government’s growth-focused measures, leading to increased imports and demand for the dollar.
Tresmark’s analysis suggests the rupee will likely remain stable until June but could depreciate afterward due to growing demand for dollars, potentially reaching around 285/dollar in the July-September quarter. However, oil prices remain a wildcard factor.
Islamabad aims to secure the remaining $1.1 billion from the IMF, pending board approval. Prime Minister Shehbaz Sharif’s government plans to negotiate a larger IMF bailout in April, aiming for at least $8 billion.
Despite economic challenges, Pakistan recorded a current account surplus of $128 million in contrast to a deficit earlier this year, leading to a reduction in the current account deficit and foreign financing gap estimates.
Foreign exchange reserves increased to $8.018 billion, and the REER rose to 102.2 in February. Additionally, Pakistan’s sovereign bonds rallied, and it plans to offer $300 million in Panda bonds.
